<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 7, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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) 969-0020
(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) 969-0020
(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. [ ]
- ------------------------------
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.01 par value............................. $65,000,000 $17,160(2)
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes shares subject to the underwriters' overallotment option.
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.
------------------------
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 JANUARY 7, 2000
[INTELLIGENT INFORMATION LOGO]
- --------------------------------------------------------------------------------
i3 MOBILE, INC.
SHARES
COMMON STOCK
- --------------------------------------------------------------------------------
This is the initial public offering of i3 Mobile, Inc. We are offering
shares of our common stock. We anticipate that the initial
public offering price will be between $ and $ per share.
We have applied to list our common stock on the Nasdaq National Market under
the symbol "IIIM."
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 9.
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
shares to cover any over-allotments.
DEUTSCHE BANC ALEX. BROWN
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 with the company name superimposed
over the logo. 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;
- - old-fashioned stock ticker 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 PDA, 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 iii" 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; old-fashioned stock
ticker). There are also graphics of a wireless phone and a PDA 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:
AGGREGATION, PERSONALIZATION, DISTRIBUTION.
All three ovals are linked by sound waves.
The text of the AGGREGATION oval:
i3 Mobile, Inc. has acquired the rights to a wide range of content for
distribution to small-screen wireless devices from over 50 third party content
providers.
To the left of and under the text are 10 content provider logos (Dow Jones;
Sports Ticker; Associated Press; The Weather Channel; Los Angeles Times; The
Canadian Press; SmarTraveler; Comtex; FOX News; 1-800-flowers.com).
The text of the PERSONALIZATION oval:
i3 Mobile, Inc. has created proprietary systems to parse, filter and format
data based on personal parameters specified by our customers through the more
than 25 interactive wireless portals we have built for wireless network
operators and Web sites.
To the left of and under the text are five [screen shots] of various
Web-provisioning sites that i3 has built (Omnipoint Communications; AT&T;
The Weather Channel; Bell Mobility; Southwestern Bell Wireless).
The text of the DISTRIBUTION oval:
i3 Mobile, Inc. has developed a network of distribution relationships with some
of the most innovative wireless carriers and Web sites in North America, who
offer our services under the "Powered by iii" brand.
To the left of and under the text are logos of business partners through whom
iii distributes its services (AT&T, Southwestern Bell Wireless;US Cellular US
West; Cellular One; Omnipoint Communications; Pacific Bell; The Weather Channel)
and our "Powered by iii" 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. In
this prospectus, references to "i3," "we," "our" and "us" refer to i3 Mobile,
Inc. unless the context requires otherwise. 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 $ per share; and
- the underwriters have not exercised their over-allotment option to
purchase additional shares of common stock.
OUR BUSINESS
We are a leading provider of timely personalized information to users of
wireless communications devices in North America. We believe that we are
positioned to capitalize on 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. 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 on both a one-way and interactive basis, as well as personal
e-mail, calendar and commerce applications.
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. We believe that we are the only provider offering wireless network
operators comprehensive, end-to-end solutions for the delivery of personalized
content and information services through their networks. We also offer enabling
solutions to Internet media networks and corporate enterprises seeking to expand
their Internet- or intranet-based services through wireless communications
networks. At December 15, 1999, we had over 450,000 users of our products and
services, of which over 100,000 were paying subscribers.
We are currently providing private label and co-branded personalized
wireless information services under agreements with more than 15 wireless
network operators, collectively representing approximately 43 million wireless
phone subscribers at June 30, 1999, or more than 50% of the total North American
market of wireless phone users. These wireless network operators include
AirTouch Cellular, AT&T Wireless Services, Inc., Bell Mobility Cellular, Inc.
(Canada), Omnipoint Communications Services and SBC Communications, Inc.
including its subsidiaries Southwestern Bell Mobile Systems, Inc., Pacific Bell
and others. We are the provider of services such as "AT&T Personal News" and
Omnipoint's "InfoServices". 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
3
<PAGE> 5
transactions. We believe that the distribution capabilities and name recognition
of our distributors allow us to rapidly develop our business and sub-brand with
lower capital requirements than would be possible on a direct-to-user basis.
OUR MARKET OPPORTUNITY
We believe that wireless mobile data is emerging as a powerful new medium,
uniquely capable of creating value for its users through the ability to deliver
highly personalized, local, timely and interactive content and services.
According to DataQuest, wireless data subscribers will grow at a compound annual
rate of 82%, from 3 million in 1999 to 36 million in 2003, creating a market
with $3 billion in annual revenue. We believe that wireless communications
subscribers and Internet users will increasingly seek to combine the benefits
and convenience of each of these services by using the mobile data medium.
International Data Corporation predicts that the worldwide annual sales of
Internet handheld devices, such as wireless phones and personal digital
assistants, or PDAs, will grow at a compound annual rate of 62% from $1.2
billion in 1998 to $8.2 billion in 2002.
OUR 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 as the single-source wireless portal for wireless network
operators, Internet media networks and corporate enterprises;
- continue to build compelling products;
- grow our user base and build i3 brand awareness;
- expand and diversify our distribution relationships;
- develop advertising and transactional revenue; and
- advance our technology and content delivery systems.
COMPETITIVE ADVANTAGES
We believe that we have several competitive advantages in the emerging
mobile data medium, including:
SIGNIFICANT ESTABLISHED BASE OF USERS AND SUBSCRIBERS: We have
established a significant base of users and paying subscribers throughout
North America by delivering compelling products and services for mobile
individuals. We believe our base of users and paying subscribers represents
an attractive market for delivery of additional products and services,
including advertising and electronic commerce transactions.
UNIQUE PLATFORM OF PROPRIETARY TECHNOLOGY AND KNOW-HOW: We have
developed and acquired technology and systems that enable us to efficiently
manage the acquisition, filtering, customization and delivery of large
amounts of data on a daily basis for delivery to virtually all available
wireless networks
4
<PAGE> 6
and devices. We are actively developing new applications to provide our
users and distributors with the ability to migrate to new and more powerful
technologies as they develop, including Internet browsing capabilities
using Wireless Applications Protocol, or WAP, which is a protocol designed
to work with the widest range of air interfaces.
ESTABLISHED DISTRIBUTION RELATIONSHIPS: We have distribution
agreements with a number of the leading wireless network operators serving
the North American market including AirTouch Cellular, AT&T Wireless
Services, Inc., Bell Mobility Cellular, Inc. (Canada), Omnipoint
Communications Services and SBC Communications, Inc. These relationships
give us access to a significant number of potential users and subscribers.
We believe these relationships position us to be the integrator of the
wireless network operator's content aggregation, message delivery, customer
profiling and customer service. We provide direct customer service to most
of our users. Also, in some cases, we directly bill our subscribers by
credit card. We work with wireless network operators, Internet media
networks and corporate enterprises to develop product packages, devise
marketing plans, promote services and support wireless user needs.
ROBUST PRODUCT AND SERVICE OFFERINGS: We believe that our ability to
provide customized, reliable, end-to-end solutions will enable our
distributors to distinguish their services in increasingly competitive
markets. We offer content from more than 50 providers and are constantly
evaluating new sources of content in response to user and subscriber
demand. We develop our product and service offerings in collaboration with
our distributors and will continue to enhance our products and services in
response to subscriber demand and technological feasibility.
RECENT DEVELOPMENTS
On December 22, 1999, we sold 8,248.33 shares of our Series F mandatorily
redeemable preferred stock for an aggregate purchase price of approximately
$32.7 million to a group of strategic and financial investors including NBC
Interactive Media, Inc., Sony Corporation of America, Sony Music Entertainment
Inc., MCI WorldCom, Inc., Clearnet Communications, Inc., GE Capital Equity
Investments, Inc., Bowman Capital Management funds and Keystone Venture V, L.P.
We believe that the investment in our company by these investors will provide us
with significant strategic benefits as we expand our business. As part of our
agreement with NBC Interactive Media, Inc., we have received $2.5 million in
television advertising rights from National Broadcasting Company, Inc., and we
have agreed to make our wireless distribution services available to NBC
Interactive Media, Inc. and its affiliates for use in connection with their
interactive content offerings. The investment by MCI WorldCom, Inc. was effected
by the conversion by an affiliate of MCI WorldCom of a $5 million promissory
note from i3. All of the shares of Series F mandatorily redeemable preferred
stock will convert into shares of common stock upon the completion of this
offering.
5
<PAGE> 7
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)
969-0020. In addition, we maintain offices at One Dock Street, Suite 500,
Stamford, Connecticut; 1237 Southridge Court, Suite 100, Hurst, Texas; and,
beginning February 1, 2000, 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.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by i3............ shares.
Common Stock to be outstanding after
this offering......................... shares.
Use of Proceeds....................... For expansion of sales and marketing,
further development of systems
infrastructure, funding operating
losses, working capital and general
corporate purposes, including
strategic 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:
- 1,805,359 shares of common stock issuable upon the exercise of warrants
as of September 30, 1999 at a weighted average of $3.19 per share, after
giving effect to the exercise of warrants to purchase 101,500 shares of
common stock in December 1999, and 123,725 shares of common stock
issuable upon the exercise of warrants issued after September 30, 1999 at
an exercise price per share of $7.92;
- an aggregate of 918,485 shares of common stock issuable upon the exercise
of outstanding stock options under our 1995 Stock Option Plan, of which
591,985 shares were issuable upon the exercise of outstanding stock
options issued as of September 30, 1999, at a weighted-average exercise
price per share of $1.99, and 326,500 shares were issuable upon the
exercise of outstanding stock options issued after September 30, 1999, at
an exercise price per share of $4.00; and
- 422,015 shares of common stock available for grant under our 1995 Stock
Option Plan as of September 30, 1999, which, as the result of stock
option grants after September 30, 1999, has been reduced to 95,515 shares
available for future grant as of the date of this prospectus.
6
<PAGE> 8
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table summarizes our consolidated statement of operations
data for each of the years ended December 31, 1994, 1995, 1996, 1997 and 1998
and for the nine-month periods ended September 30, 1998 and 1999, and our
consolidated balance sheet data as of September 30, 1999. 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,
1998 and the nine months ended September 30, 1999 reflect the conversion of all
of our outstanding shares of preferred stock into common stock as though this
event occurred as of their issuance date.
The pro forma summary consolidated balance sheet data below reflects the
following transactions as though these transactions occurred as of September 30,
1999:
- the sale on November 23, 1999 of 1,928.64 shares of Series E mandatorily
redeemable preferred stock for $3 million;
- the amendment on December 22, 1999 of the Series C convertible preferred
stock designation to provide for mandatory conversion into common stock
upon the completion of an initial public offering;
- the amendment on December 22, 1999 of our certificate of incorporation to
increase the authorized shares of common stock from 25,000,000 shares to
50,000,000 shares and to increase the authorized shares of preferred
stock from 25,000 shares to 50,000 shares;
- the conversion on December 22, 1999 of a five-year convertible note, a
portion of which was used to purchase 79.96 shares of Series F
mandatorily redeemable preferred stock at a price of $3,960.40 per share
and the balance of which was used to exercise a warrant to purchase
101,500 shares of common stock at an exercise price per share of $1.72;
- the conversion on December 29, 1999 of a five-year $5 million note
payable into 1,262.50 shares of Series F mandatorily redeemable preferred
stock at a price of $3,960.40 per share; and
- the sale on December 22, 1999 of 8,248.33 shares of Series F mandatorily
redeemable preferred stock for consideration of $32.7 million, including
the note conversions described above and television advertising rights
preliminarily valued at $2.5 million in pro forma total assets.
The pro forma as adjusted summary consolidated balance sheet data below
adjusts the pro forma information to give effect to each of the following items:
- the conversion of all of our outstanding shares of preferred stock into
11,316,765 shares of common stock; and
- the sale of shares of common stock offered by us after
deducting underwriting discounts and commissions and estimated offering
expenses, and the application of the estimated net proceeds. See Use of
Proceeds.
7
<PAGE> 9
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------- -----------------------
1994 1995 1996 1997 1998 1998 1999
------ ------ --------- ------- --------- ----------- ---------
(UNAUDITED) (AUDITED) (AUDITED) (AUDITED) (UNAUDITED) (AUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue...................... $ 214 $ 387 $ 645 $ 825 $ 1,405 $ 1,023 $ 1,325
Cost of revenue.................. 115 190 465 671 762 621 673
------ ------ ------- ------- ------- ------- -------
Gross profit..................... 99 197 180 154 643 402 652
Operating expenses............... 170 966 1,507 2,521 3,209 2,394 4,534
------ ------ ------- ------- ------- ------- -------
Operating loss................... (71) (769) (1,327) (2,367) (2,566) (1,992) (3,882)
Interest (income)
expense - net.................. 6 (22) (8) 81 329 228 290
------ ------ ------- ------- ------- ------- -------
Net loss......................... $ (77) $ (747) $(1,319) $(2,448) $(2,895) $(2,220) $(4,172)
====== ====== ======= ======= ======= ======= =======
Loss applicable to common
stock.......................... $ (77) $ (747) $(1,327) $(2,524) $(3,169) $(2,435) $(9,527)
====== ====== ======= ======= ======= ======= =======
Net loss per share - basic and
diluted........................ $(0.02) $(0.10) $ (0.18) $ (0.33) $ (0.42) $ (0.32) $ (1.60)
====== ====== ======= ======= ======= ======= =======
Shares used in computing net loss
per share...................... 4,670 7,282 7,552 7,554 7,554 7,554 5,966
Pro forma net loss per share -
basic and diluted
(unaudited).................... $ (0.28) $ (0.39)
======= =======
Pro forma shares used in
computing net loss per share
(unaudited).................... 10,455 10,785
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 4,000 $ 31,850
Working capital............................................. 3,369 31,320
Total assets................................................ 5,442 35,792
Long-term debt, less current portion........................ 5,348 --
Mandatorily redeemable convertible preferred stock.......... 16,134 51,801
Total stockholders' equity (deficit)........................ (17,321) (17,189)
</TABLE>
- -------------------------
The outstanding share information shown in the table above excludes:
- 1,805,359 shares of common stock issuable upon the exercise of warrants
as of September 30, 1999 at a weighted average of $3.19 per share, after
giving effect to the exercise of warrants to purchase 101,500 shares of
common stock in December 1999, and 123,725 shares of common stock
issuable upon the exercise of warrants issued after September 30, 1999 at
an exercise price per share of $7.92;
- an aggregate of 918,485 shares of common stock issuable upon the exercise
of outstanding stock options under our 1995 Stock Option Plan, of which
591,985 shares were issuable upon the exercise of outstanding stock
options issued as of September 30, 1999, at a weighted-average exercise
price per share of $1.99, and 326,500 shares were issuable upon the
exercise of outstanding stock options issued after September 30, 1999, at
an exercise price per share of $4.00; and
- 422,015 shares of common stock available for grant under our 1995 Stock
Option Plan as of September 30, 1999, which, as the result of stock
option grants after September 30, 1999, has been reduced to 95,515 shares
available for future grant as of the date of this prospectus.
8
<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 HAVE A LIMITED OPERATING HISTORY IN OUR CURRENT BUSINESS, 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. Therefore, the operating history of
our business in its current form is limited. 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 have spent limited
resources on promoting and marketing our products and services to our individual
and corporate customers. We expect to spend significant resources on expanding
our products and services and promoting our brand name for the foreseeable
future. Consequently, you should view us as an early stage enterprise
notwithstanding the fact that we have been engaged in our business for several
years. We face a number of risks encountered by early stage companies in the
wireless telecommunications industry. 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 $4,172,000 for the nine months ended September 30, 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
September 30, 1999, our accumulated deficit was $17,658,000. 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.
9
<PAGE> 11
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.
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, is unproven and is likely to continue
to evolve. Accordingly, it 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 validation that the use of wireless telephony and other wireless
devices, the use of the Internet and the need to obtain immediate personalized
and timely information will continue to grow and that mobile individuals, if
offered the opportunity, will increasingly use mobile devices to access the
Internet and/or Internet based 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. We intend to continue to develop
our business model as we explore opportunities domestically and internationally
and in new and unproven areas such as wireless electronic commerce.
Although wireless device and Internet usage is growing rapidly, we cannot
be certain that this growth will continue in its present form, or at all. We
believe our success ultimately will depend upon, among other things, our ability
to:
- increase awareness of i3's brand and the availability of our products and
services;
- continue to attract and retain wireless network operators to distribute
our products and services;
- continue to attract and retain subscribers;
- continue to develop distribution relationships with Internet media
networks and corporate enterprises;
- continue to develop relationships with content providers;
- continue to attract and retain electronic commerce companies; and
- continue to attract advertisers.
IF WIRELESS DEVICES ARE NOT WIDELY ACCEPTED FOR MOBILE DELIVERY OF CONTENT
SERVICES, OUR BUSINESS WILL SUFFER MATERIALLY.
Our future success depends upon on the acceptance of wireless
communications for delivery of content and Internet-based services. Most mobile
individuals currently use portable computers to access the Internet 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. We
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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. In addition, our expenses would increase
and our profitability could be materially adversely affected if our wireless
network operators were to change their current fee structures.
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 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 will be satisfactory. If the marketing
and/or distribution efforts of wireless network operators, Internet media
networks or corporate enterprises fail to result in new users, we may be unable
to attract new subscribers and our revenue could be adversely affected.
BECAUSE A FEW OF OUR WIRELESS NETWORK OPERATORS ACCOUNT FOR A HIGH PERCENTAGE OF
OUR REVENUE, A LOSS OF ANY OF THEM AS DISTRIBUTORS OF OUR PRODUCTS AND SERVICES
WOULD 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 60% of our total revenue for the nine months ended September 30,
1999 and 24% for the nine months ended September 30, 1998. In addition,
Omnipoint Communications Services alone accounted for over 35% of our total
revenue for the nine months ended September 30, 1999 and 31% for the nine months
ended September 30, 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. Although we have agreements with these wireless network
operators, they generally are for
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one- to three-year terms. Our growth depends on maintaining our relationships
with our existing wireless network operators and developing distribution
relationships with additional wireless network operators. If we lose any of our
existing 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. 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. We are
actively attempting to hire new employees to help us manage our growth, and we
are evaluating supplementing or replacing our accounting and other systems to
enable us to manage our expansion. 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
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.
BECAUSE OUR FINANCIAL RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS, WE MAY
NOT MEET EXPECTATIONS OF INVESTORS AND ANALYSTS AND OUR STOCK PRICE MAY DECLINE.
The rapidly evolving wireless data communications market makes it difficult
to predict our operating results. Our profitability depends on 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;
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- 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 integration and offering of new content, which are
likely to be incurred substantially in advance of related revenues. We may be
unable to adjust spending quickly enough to offset any unexpected demand
shortfall or delay in offering our products and services. As a result, our
operating results are likely to fluctuate from period to period. If we do not
meet expectations of investors and analysts 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. We have an employment agreement with Mr.
Maloney and we maintain key-man life insurance in the amount of $2,000,000 on
Mr. Maloney.
Our growth and success also depends 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 others 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.
IF WE DO NOT OBTAIN ADDITIONAL CAPITAL ON ACCEPTABLE TERMS, WE MAY NOT BE ABLE
TO CONTINUE TO GROW OUR BUSINESS.
Our business does not generate the cash necessary to fund our operations.
In the past, we have met our capital needs through private sales of securities.
In
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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;
- enter into strategic relationships with content and electronic commerce
providers;
- create advanced customer care and operations centers; and
- fund operating losses and working capital.
We currently anticipate that our available cash resources, combined with
the net proceeds from this offering will be sufficient to fund our operating
needs for at least the next 24 months. Thereafter, we expect to require
additional financing in an amount that we cannot determine at this time. We may
need to raise funds through public or private debt or equity financings. 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. If additional funds are raised through a bank
credit facility or the issuance of debt securities, the holder 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
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.
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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. In addition, we may not successfully migrate our complimentary users to
subscription services through our marketing efforts. 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 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 compelling. Our content agreements frequently are for
one-year terms and are non-exclusive. Our content providers may choose not to
renew their agreements with us or may terminate their agreements early if we do
not fulfill our contractual obligations. If that were to occur, we would need to
establish new relationships with other content providers, or 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 substantially, our revenues and
profitability would be affected. Our failure to maintain attractive and
compelling 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. Our current and potential competitors include:
- wireless data providers and portals, such as Wireless Knowledge, a joint
venture of Microsoft Corporation and Qualcomm Incorporated, MSN Mobile,
Datalink, Airflash, Phone.com, Microsoft Corporation, Yahoo!, Inc.,
InfoSpace.com and Saraide.com;
- wireless financial service providers, such as Aether Systems, Inc. and
724 Solutions Inc.; and
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- wireless network operators, such as AT&T Wireless, Bell Atlantic Mobile,
Metricom, Inc., Nextel Communications, Inc., Omnipoint Communications
Services and Sprint PCS.
In addition, there are other companies that have announced their intention
to enter the wireless data provider market, including America Online, Inc. and
TIBCO Software Inc. Many of our competitors and potential competitors have
significantly greater resources than we do. Furthermore, some competitors have
and others may develop a different approach to marketing the products and
services we provide in that subscribers may not be required to pay for the
wireless information provided. Competition could reduce our market share or
force us to lower prices to unprofitable levels. 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 wireless network operators limit the content or new products and services we
may offer their subscribers including advertising and electronic commerce, our
revenue could be adversely affected.
BECAUSE OUR DISTRIBUTORS MAY EXPERIENCE A HIGH RATE OF CUSTOMER TURNOVER, OUR
COSTS OF OPERATIONS COULD INCREASE AND OUR REVENUE COULD DECREASE.
Many providers in the personal communications 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, or losses incurred in, obtaining new subscribers.
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 may 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
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subscribers that have recently cancelled their service with their wireless
network operator. Therefore, we cannot assure you that the user and subscriber
counts reflected in our database are accurate at any particular date.
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.
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 taken steps to protect our technology, trademarks and other proprietary
rights. We have filed an application to register the mark "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, or ADMATTs. 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. The steps we have taken may be inadequate to protect our
technology and other intellectual property. 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 WAP Forum, which is an industry association of
wireless service, wireless equipment and software companies that has developed
worldwide standards for wireless information and telephony services on digital
mobile phones and other wireless devices. As a result of our affiliation with
the WAP Forum, we have agreed to license our intellectual property to other WAP
Forum 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 WAP Forum. Each other member of the WAP Forum 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 of the WAP Forum will take the steps necessary to protect our
proprietary information.
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Although we have taken steps to avoid infringement claims from others,
these measures may not be adequate to prevent others from claiming that we
violated their patents, other trademarks or other proprietary rights. 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
- 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 telephony 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 do any of the foregoing, 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,
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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. Furthermore, we may
incur indebtedness or issue equity securities to pay for any future
acquisitions. 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 SALES.
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 customers
and suppliers. We may not be successful in developing and marketing, on a timely
and cost-effective basis, new products and services that respond to
technological changes, evolving industry standards or changing customer
requirements. Our ability to grow and achieve profitability will depend, in
part, on our accomplishing all of the following in a timely and cost-effective
manner:
- effectively use and integrate new wireless and data technologies;
- continue to develop our technical expertise;
- enhance our wireless data, engineering and system design services;
- develop applications for new wireless networks; and
- influence and respond to emerging industry standards and other changes.
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.
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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 are also
upgrading our backup data center in Hurst, Texas, which is scheduled to be
operational during the second quarter of 2000. 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.
RISKS RELATED TO REGULATION OF THE INTERNET, WIRELESS TELEPHONY
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.
We are not currently subject to direct regulation by the Federal
Communications Commission or any other governmental agency, other than
regulations applicable to businesses in general. However, 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 are an increasing number of laws and
regulations pertaining to wireless telephony 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;
- 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; and
- taxation of the sale of goods and services over the Internet.
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.
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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.
Various types of content may be accessed through our wireless portals. 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 contain
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.
We also 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 strategic 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.
21
<PAGE> 23
IF AN ACTIVE TRADING MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, THEN THE
MARKET PRICE OF OUR COMMON STOCK COULD DECLINE OR YOU MAY BE UNABLE TO SELL YOUR
SHARES.
We cannot predict the extent to which an active trading market for our
common stock will develop or how liquid that market might become. As a result,
you may find it difficult to sell your shares and our share price may decline
below its initial public offering price. The initial public offering price will
be determined by negotiations between representatives of the underwriters and us
and may not be indicative of prices that will prevail in the trading market.
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 following periods of volatility because of the
market's adverse reaction to that 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;
- changes in financial estimates by securities analysts;
- conditions or trends generally affecting the Internet and wireless
services industry;
- changes in the market valuations of other Internet and wireless services
companies;
- announcements by us or our competitors of technological developments,
significant acquisitions, strategic partnerships or joint ventures;
- capital commitments;
- additions or departures of key personnel; and
- sales of common stock or other equity securities.
Many of these factors are beyond our control. These factors may materially
and adversely affect the market price of our common stock, regardless of our
operating performance.
22
<PAGE> 24
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 IN THEIR INVESTMENT.
Investors purchasing shares in this offering will incur immediate and
substantial dilution 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 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 2,847,569 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.
BECAUSE WE EXPECT APPROXIMATELY 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 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).................................
At various times thereafter upon the expiration of
one-year holding periods...........................
</TABLE>
Of these shares, 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.
BECAUSE WE ARE SUBJECT TO ANTI-TAKEOVER PROVISIONS, A THIRD-PARTY MAY BE
DISCOURAGED FROM ACQUIRING OUR COMPANY, WHICH COULD BENEFIT OUR STOCKHOLDERS.
i3 is 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;
23
<PAGE> 25
- 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.
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.
24
<PAGE> 26
USE OF PROCEEDS
We estimate that we will receive approximately $ million in net
proceeds from this offering, or $ million if the underwriters'
over-allotment option is exercised in full, based on an assumed initial public
offering price equal to $ 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 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 strategic 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.
We have not yet determined the amount of net proceeds to be used
specifically for each of the foregoing purposes. Accordingly, 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.
25
<PAGE> 27
CAPITALIZATION
The following table shows our capitalization as of September 30, 1999, on
an actual basis, a pro forma basis and a pro forma as adjusted basis.
The pro forma information below reflects the following transactions as
though these transactions occurred as of September 30, 1999:
- the sale on November 23, 1999 of 1,928.64 shares of Series E mandatorily
redeemable preferred stock for $3 million;
- the amendment on December 22, 1999 of the Series C convertible preferred
stock designation to provide for mandatory conversion into common stock
upon the completion of an initial public offering;
- the amendment on December 22, 1999 of our certificate of incorporation to
increase the authorized shares of common stock from 25,000,000 shares to
50,000,000 shares and to increase the authorized shares of preferred
stock from 25,000 shares to 50,000 shares;
- the conversion on December 22, 1999 of a five-year convertible note, a
portion of which was used to purchase 79.96 shares of Series F
mandatorily redeemable preferred stock at a price of $3,960.40 per share
and the balance of which was used to exercise a warrant to purchase
101,500 shares of common stock at an exercise price per share of $1.72;
- the conversion on December 29, 1999 of a five-year $5 million note
payable into 1,262.50 shares of Series F mandatorily redeemable preferred
stock at a price of $3,960.40 per share; and
- the sale on December 22, 1999 of 8,248.33 shares of Series F mandatorily
redeemable preferred stock for consideration of $32.7 million, including
the note conversions described above and television advertising rights
preliminarily valued at $2.5 million.
The pro forma as adjusted information adjusts the pro forma information to
give effect to each of the following items:
- the conversion of all of our outstanding preferred stock into 11,316,765
shares of common stock; and
- the sale of shares of common stock offered by us, after
deducting underwriting discounts and commissions and estimated offering
expenses, and the application of the estimated net proceeds. See Use of
Proceeds.
26
<PAGE> 28
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 4,000 $ 31,850
======== ========
Short-term debt and current portion of long-term debt....... 130 29
Long-term debt, less current portion........................ 5,348 --
Mandatorily redeemable preferred stock:
Series B mandatorily redeemable preferred stock, $.01 par
value; 1,705 shares authorized; 1,705 shares issued and
outstanding, actual and pro forma; no shares issued and
outstanding, pro forma as adjusted...................... 1,454 1,454
Series D mandatorily redeemable preferred stock, $.01 par
value; 843 shares authorized; 843 shares issued and
outstanding, actual and pro forma; no shares issued and
outstanding, pro forma as adjusted...................... 1,229 1,229
Series E mandatorily redeemable preferred stock, $.01 par
value; 9,643.2 shares authorized; 7,714.56 shares issued
and outstanding, actual and 9,643.2 shares issued and
outstanding, pro forma; no shares issued and
outstanding, pro forma as adjusted...................... 16,451 16,451
Series F mandatorily redeemable preferred stock, $.01 par
value; 8,248.33 shares authorized; no shares issued and
outstanding, actual and 8,248.33 shares issued and
outstanding, pro forma; no shares issued and
outstanding, pro forma as adjusted...................... -- 32,667
Subscriptions receivable.................................... (3,000) --
-------- --------
Total mandatorily redeemable preferred stock............ $ 16,134 $ 51,801 --
-------- --------
Stockholders' equity:
Series C convertible preferred stock, $.01 par value;
2,194 shares authorized; 2,194 shares issued and
outstanding, actual and pro forma; no shares issued and
outstanding pro forma as adjusted.......................
-------- --------
Common stock, $.01 par value; 25,000,000 shares
authorized, actual; 50,000,000 shares authorized, pro
forma and pro forma as adjusted; 7,554,000 shares issued
and outstanding, actual, 7,655,500 shares issued and
outstanding pro forma; shares issued and
outstanding, pro forma as adjusted...................... 76 77
Additional paid-in capital.................................. 4,601 4,775
Notes receivable from stockholders.......................... (37) (37)
Deferred compensation....................................... (73) (73)
Accumulated deficit......................................... (17,658) (17,701)
Treasury stock at cost, 1,885,000 shares.................... (4,230) (4,230)
-------- --------
Total stockholders' equity (deficit)...................... $(17,321) $(17,189)
-------- --------
Total capitalization...................................... $ 4,291 $ 34,641
======== ========
</TABLE>
- -------------------------
The outstanding share information shown in the table above excludes:
- 1,805,359 shares of common stock issuable upon the exercise of warrants as
of September 30, 1999 at a weighted average of $3.19 per share, after
giving effect to the exercise of warrants to purchase 101,500 shares of
common stock in December 1999, and 123,725 shares of common stock issuable
upon the exercise of warrants issued after September 30, 1999 at an
exercise price per share of $7.92;
- an aggregate of 918,485 shares of common stock issuable upon the exercise
of outstanding stock options under our 1995 Stock Option Plan, of which
591,985 shares were issuable upon the exercise of outstanding stock
options issued as of September 30, 1999, at a weighted-average exercise
price per share of $1.99, and 326,500 shares were issuable upon the
exercise of outstanding stock options issued after September 30, 1999, at
an exercise price per share of $4.00; and
- 422,015 shares of common stock available for grant under our 1995 Stock
Option Plan as of September 30, 1999, which, as the result of stock option
grants after September 30, 1999, has been reduced to 95,515 shares
available for future grant as of the date of this prospectus.
27
<PAGE> 29
DILUTION
Our pro forma net tangible book value at September 30, 1999 was
$ million or $ 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 September 30, 1999. Our pro
forma as adjusted net tangible book at September 30, 1999, assuming no changes
in our pro forma net tangible book value other than the sale of
shares of common stock in this offering at an assumed initial
offering price of $ per share and application of estimated net proceeds of
$ from such sale after deducting the underwriting discounts and
commissions and estimated offering expenses, would have been approximately
$ or $ per share. This represents an immediate increase in pro
forma net tangible book value of $ per share to existing stockholders and an
immediate dilution of $ 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............. $
Pro forma net tangible book value per share as of
September 30, 1999.................................... $
Increase per share attributable to new investors.......
------
Pro forma as adjusted net tangible book value per share
after this offering....................................
------
Dilution per share to new investors....................... $
======
</TABLE>
The following table summarizes at September 30, 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.................. % $ % $
New investors..........................
------- --- ------- ---
Total............................. 100% $ 100% $
======= === ======= ===
</TABLE>
- -------------------------
The outstanding share information shown in the table above excludes:
- - 1,805,359 shares of common stock issuable upon the exercise of outstanding
warrants as of September 30, 1999 at a weighted average exercise price per
share of $3.19, after giving effect to the exercise of warrants to purchase
101,500 shares of common stock in December 1999, and 123,725 shares issuable
upon exercise of outstanding warrants issued after September 30, 1999 at an
exercise price per share of $7.92;
- - an aggregate of 918,485 shares of common stock issuable upon the exercise of
outstanding stock options under our 1995 Stock Option Plan, of which 591,985
shares were issuable upon the exercise of outstanding stock options as of
September 30, 1999, at a weighted-average exercise price per share of $1.99,
and 326,500 shares were issuable upon the exercise of outstanding stock
options issued after September 30, 1999, at a price per share of $4.00; and
- - 422,015 shares of common stock available for grant under our 1995 Stock Option
Plan as of September 30, 1999, which, as a result of stock option grants after
September 30, 1999, has been reduced to 95,515 shares available for future
grant as of the date of this prospectus.
28
<PAGE> 30
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data set forth below as of
December 31, 1997 and 1998 and for the fiscal years ended December 31, 1996,
1997 and 1998 and as of and for the nine months ended September 30, 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, 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 years ended December 31, 1994 and 1995 and for the nine
months ended September 30, 1998 are derived from our unaudited consolidated
financial statements. The unaudited consolidated financial statements include,
in the opinion of our management, all adjustments, consisting only of normal
recurring adjustments, that we consider necessary for the fair presentation of
the information set forth.
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>
NINE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------- -----------------------
1994 1995 1996 1997 1998 1998 1999
------ ------ ------- ------- ------- ----------- ---------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue................................. $ 214 $ 387 $ 645 $ 825 $ 1,405 $ 1,023 $ 1,325
Cost of revenues............................ 115 190 465 671 762 621 673
------ ------ ------- ------- ------- ------- -------
Gross profit................................ 99 197 180 154 643 402 652
------ ------ ------- ------- ------- ------- -------
Operating expenses:
Sales and marketing....................... 18 110 180 234 584 382 1,278
General and administrative................ 152 856 1,327 2,287 2,625 2,012 3,256
------ ------ ------- ------- ------- ------- -------
Total operating expenses.................. 170 966 1,507 2,521 3,209 2,394 4,534
------ ------ ------- ------- ------- ------- -------
Operating loss.............................. (71) (769) (1,327) (2,367) (2,566) (1,992) (3,882)
Interest expense (income) - net............. 6 (22) (8) 81 329 228 290
------ ------ ------- ------- ------- ------- -------
Net loss.................................... $ (77) $ (747) $(1,319) $(2,448) $(2,895) $(2,220) $(4,172)
====== ====== ======= ======= ======= ======= =======
Loss applicable to common stock............. $ (77) $ (747) $(1,327) $(2,524) $(3,169) $(2,435) $(9,527)
====== ====== ======= ======= ======= ======= =======
Net loss per share - basic and diluted...... $(0.02) $(0.10) $ (0.18) $ (0.33) $ (0.42) $ (0.32) $ (1.60)
====== ====== ======= ======= ======= ======= =======
Shares used in computing net loss per
share..................................... 4,670 7,282 7,552 7,554 7,554 7,554 5,966
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
-------------------------------------------- -------------
1994 1995 1996 1997 1998 1999
----- ------ ------- ------- ------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................ $ 3 $ 139 $ 1,168 $ 215 $ 166 $ 4,000
Working capital.................................. (95) 229 756 (533) (687) 3,369
Total assets..................................... 29 262 1,343 375 682 5,442
Long-term debt, less current portion............. 46 -- 646 573 455 5,348
Mandatorily redeemable preferred stock........... -- -- 1,138 1,412 2,500 16,134
Total stockholders' equity (deficit)............. (248) 201 (916) (2,488) (3,578) (17,321)
</TABLE>
29
<PAGE> 31
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. is a leading provider of 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 product offered directly to our subscribers. 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 telephony network operator and launched our products
and services on the digital personal communication services, or PCS, 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 information profile,
and on-demand content products, which are messages sent to a subscriber shortly
after information is requested.
Our Omnipoint launch was followed in 1997 by our introduction of tiered
subscription service offerings on the PrimeCo PCS network. That year we also
deployed our first wireless microbrowser-based products on AT&T's PocketNet
platform in conjunction with Phone.com. In 1998, we expanded our distribution
network by entering into agreements with other digital wireless network
operators such as Bell Mobility Cellular, Inc. (Canada), SBC Communications,
Inc., including its subsidiaries Pacific Bell, Southwestern Bell Mobile Systems,
Inc. and others, and US Cellular. In 1999, we entered into distribution
agreements with additional wireless network operators, such as AirTouch
Cellular, Clearnet PCS, MTT Mobility (Canada) and US West Wireless as well as
AT&T Wireless Services, which offers subscription, electronic commerce and
advertising-supported services to its customers. In 1999, we also introduced
electronic commerce through 1-800-FLOWERS and advertising-supported services
through Omnipoint consisting of tagged messaging to complimentary users. During
1999 we also began offering certain of our services in conjunction with The
Weather Channel through its Weather.com Internet site as our first offering to
an Internet media network.
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 i3 as the single-source
wireless portal supplier for our distributors by building compelling products
and continually enhancing our
30
<PAGE> 32
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, interactive telephone response
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 both the number of 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.
In order to increase awareness of our products and services, our
distributors may offer their subscribers the opportunity to receive a limited
data product selection on their wireless device free of charge. Since content
providers that supply our complimentary content can leverage their existing
products in the new wireless medium marketplace with significant co-branding
opportunities, they typically provide their content at little or no
out-of-pocket cost to us. While we do not receive subscription revenue from
users of complimentary services, in certain cases, we receive nominal fees per
subscriber from our distributors and have the opportunity to add advertising
taglines to user content for which we can charge advertising fees. 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 395,000 as of September 30, 1999.
We believe that our future success will depend on our ability to deliver a
variety of wireless content and 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;
- expanding our product development, sales, marketing and technology staffs
to support emerging demand, opportunities and technologies;
- expanding our focus to include additional international markets;
- expanding our product offerings in content, commerce and technology;
- expanding our advertising and promotional activities; and
31
<PAGE> 33
- further developing our technology platforms, operational capabilities and
infrastructure.
RESULTS OF OPERATIONS
We have received the majority of our revenue from subscription fees for
personalized news and information products and services delivered to users via
wireless devices, such as digital PCS phones, pagers and PDAs. 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;
- on-demand information products offering users the ability to request 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 from a limited range of general news content providers at no
charge; and
- wireless portal applications offering users with Internet-enabled phones
employing microbrowser technology 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.
Our products and services are offered to subscribers on a monthly,
quarterly and annual basis based on pricing models designed to generate a high
volume of subscribers. Individual subscription services renew automatically
until the subscriber cancels. 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 building our subscriber base, we capture
information on each user which we will use in delivering targeted advertising
and electronic commerce transactions to that user. Although revenues to date
have been nominal for targeted advertising and electronic commerce transactions,
we also receive a percentage of the value of any electronic commerce
transactions that we facilitate and anticipate that we will receive additional
revenue from hosting secure wireless electronic commerce authentication
services. Advertising revenues are recognized in the month that the advertising
messages are sent. We also provide software design and customization services to
our distributors and usually charge either a one-time fee or fees on a time and
material basis for these services.
We offer complimentary services to build awareness of our products and
services and generate advertising revenue. We believe that by offering certain
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 recognize subscriber revenue when products and
services are provided or rendered. Deferred revenue is comprised of payments
received from our resellers in advance of wireless information services being
rendered. These revenues are included net of volume discounts to our
subscribers. In addition to our subscriber revenue, we plan to derive
advertising and electronic commerce revenues from both complimentary service
users and subscribers in the future.
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<PAGE> 34
Cost of revenues consists primarily of costs associated with purchasing our
content, royalty payments and distribution fees. Distribution fees 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. 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. Management believes that the cost of revenues and gross
margins 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. These fees are based 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.
Product development costs, including all costs incurred to establish the
technological feasibility of our products and services, are expensed as
incurred. 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. 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.
Net interest expense is comprised primarily of interest on our indebtedness
to the Connecticut Development Authority and Intelligent Investment Partners,
Inc. 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 early stage companies, particularly those
in rapidly evolving markets such as the wireless telecommunications 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.
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1999
Net Revenue. Subscription based revenue increased 30% from $1,023,000 for
the nine months ended September 30, 1998 to $1,325,000 for the nine months ended
September 30, 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, particularly Omnipoint Commu-
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nications Services. The percentage revenue increase 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. Revenue generated by subscribers of Omnipoint Communications Services,
SBC Communications and Bell Mobility together accounted for approximately 60% of
our total revenue for the nine months ended September 30, 1999 and 24% for the
nine months ended September 30, 1998. In addition, Omnipoint Communications
Services alone accounted for over 35% of our total revenue for the nine months
ended September 30, 1999 and 31% for the nine months ended September 30, 1998.
Net revenues from SkyTel Communications, Inc., a related party, decreased from
$109,000 for the nine months ended September 30, 1998 to $88,000 for the nine
months ended September 30, 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. We expect that we will generate a
significant portion of our revenue from users utilizing services from a
relatively small number of wireless network operators for the foreseeable
future.
Cost of Revenue. Total cost of revenues were comparable for the nine
months ended September 30, 1998 and September 30, 1999, increasing from $621,000
to $673,000. Because of the increase in content delivery to our users and the
increase in the number of content providers, our content-related costs for the
nine months ended September 30, 1999 were 36% higher than our costs for the nine
months ended September 30, 1998. This increase in content-related costs was
offset by a $48,000 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
235% from $382,000 for the nine months ended September 30, 1998 to $1,278,000
for the nine months ended September 30, 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. Additionally, our expenses increased during 1999 because we expanded
our cooperative advertising program and established a market development fund
program with some of our distributors to provide them with an incentive to
expand our respective subscriber bases.
General and Administrative Expenses. General and administrative expenses
increased by 62% from $2,012,000 for the nine months ended September 30, 1998 to
$3,256,000 for the nine months ended September 30, 1999. This increase was
primarily due to increased compensation costs from the addition of general
corporate and business development personnel, increased professional fees, rent
and other related infrastructure expenses.
Interest Expense (Income), Net. Net interest expense increased by 27% from
$228,000 for the nine months ended September 30, 1998 to $290,000 for the nine
months ended September 30, 1999. The increased interest expense on the
$5,000,000 note payable to Intelligent Investment Partners, Inc. for the nine
months ended September 30, 1999 was offset by one-time interest charges in the
nine
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months ended September 30, 1998 for the issuance of warrants to purchase shares
of common stock in connection with loans made to us.
Net Loss. We incurred net losses of $2,220,000 for the nine months ended
September 30, 1998 and $4,172,000 for the nine months ended September 30, 1999.
The increase in net loss was attributable to the substantial increase in our
operating expenses, in particular our general and administrative expenses.
FISCAL YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
Net Revenue. Subscription-based revenues increased from $645,000 for the
year ended December 31, 1996, and $825,000 for the year ended December 31, 1997
to $1,405,000 for the year ended December 31, 1998. In 1996 our revenue was
comprised primarily of subscriber revenues from paging carriers and a corporate
enterprise project for Aetna US Healthcare to create subscription-based
services. As a result of entering into a distribution relationship with
Omnipoint Communications Services, our revenues increased during 1997. During
the year ended December 31, 1997, we received 14% of our revenues from our new
wireless telephony distribution agreement with Omnipoint Communications Services
and 19% from an enterprise project for Bank of America to create
subscription-based services. The increase in 1998 was primarily due to entering
into new distribution agreements with PCS 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 revenues from SkyTel Communications, Inc., a related party, were $217,000
for the year ended December 31, 1996, $149,000 for the year ended December 31,
1997 and $160,000 for the year ended December 31, 1998. Throughout these periods
the pricing of individual services has decreased. However, the impact of these
individual price decreases has been offset by increases in service offerings and
increased subscribers.
Cost of Revenue. The cost of providing our products and services increased
from $465,000 for the year ended December 31, 1996, to $671,000 for the year
ended December 31, 1997, to $762,000 for the year ended December 31, 1998. We
received content for the year ended December 31, 1996 at a relatively high cost.
Many of our content provider agreements had minimum fees unrelated to actual
usage. The cost of revenue for the year ended December 31, 1997 increased at a
greater rate than revenue because of our increased costs for providing weather
content and complimentary equipment and services associated with new financial
services for a two-way paging network. During 1998, we terminated our higher-
cost content agreements. Additionally in 1998, with the introduction of PCS
services, we were able to enter into lower cost content provider agreements, and
with the reduction of paging service offerings, we were able to reduce expenses
related to our usage of paging equipment and networks.
Sales and Marketing Expenses. Sales and marketing expenses increased from
$180,000 for the year ended December 31, 1996, to $234,000 for the year ended
December 31, 1997, and to $584,000 for the year ended December 31, 1998. The
increase in 1997 was primarily attributable to increased compensation costs. The
increase for the year ended December 31, 1998 was attributable to the initiation
of an aggressive marketing program during the year to attract new users and
subscribers and the addition of sales and marketing personnel to attract new
distributors.
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General and Administrative Expenses. General and administrative expenses
increased from $1,327,000 for the year ended December 31, 1996, to $2,287,000
for the year ended December 31, 1997, and to $2,625,000 for the year ended
December 31, 1998. These increases were the result of personnel and related
infrastructure costs, such as office hardware, network systems and software. The
increase in 1997 includes $507,000 of general and administrative expense related
to our former subsidiary, Strategic Communications Corp. Strategic
Communications Corp. had no significant impact in other years as it was
purchased in November 1996 and disposed of in January 1998.
Interest Expense (Income), Net. Net interest expense (income) was ($8,000)
for the year ended December 31, 1996, $81,000 for the year ended December 31,
1997 and $329,000 for the year ended December 31, 1998. Interest expense, net in
1997 was primarily the result of incurring $750,000 of debt to the Connecticut
Development Authority on December 30, 1996. Interest expense, net in 1998
includes interest on the debt to Connecticut Development Authority and one-time
interest charges for the issuance of warrants to purchase shares of common stock
in connection with loans made to us.
Net Loss. We incurred losses of $1,319,000 for the year ended December 31,
1996, $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.
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 net proceeds of $18,550,000 through September 30, 1999. 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.
As of September 30, 1999, we had $4,000,000 in cash and cash equivalents
and a subscription receivable by an existing stockholder for the purchase of
additional shares of Series E convertible preferred stock which was received in
November 1999 for an additional $3,000,000 in cash.
Net cash used in operating activities was $868,000 for the year ended
December 31, 1996, $2,381,000 for the year ended December 31, 1997, $2,644,000
for the year ended December 31, 1998, $1,916,000 for the nine months ended
September 30, 1998 and $4,013,000 for the nine months ended September 30, 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 $1,995,000 for the year ended
December 31, 1996, $1,446,000 for the year ended December 31, 1997, $2,652,000
for the year ended December 31, 1998, $1,767,000 for the nine months ended
September 30, 1998 and $8,157,000 for the nine months ended September 30, 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
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debt. In December 1996, we executed a note agreement with the Connecticut
Development Authority, which provided loan proceeds to us of $750,000. The note
bears interest initially at the rate of 8.25% and is adjusted annually to the
federal reserve rate for five-year treasury securities plus 2.5%. Principal
payments under the terms of the agreement began in 1997. In December 1999, a
portion of this note was converted into shares of Series F mandatorily
redeemable preferred stock, and the remainder was used to exercise warrants for
shares of our common stock.
Cash used in investing activities was $99,000 for the year ended December
31, 1996, $17,000 for the year ended December 31, 1997, $57,000 for the year
ended December 31, 1998, $57,000 for the nine months ended September 30, 1998,
and $310,000 for the nine months ended September 30, 1999. Cash used in
investing activities relates primarily to cash purchases of fixed assets.
Additionally, we acquired Strategic Communications Corp. in 1996 for $98,000 and
entered into a license agreement for a technology patent for which we paid
$100,000 during 1999.
As of September 30, 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 $750,000 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 significantly 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.
In December 1999 we received consideration of approximately $32,667,000
from the sale of 8,248.33 shares of Series F mandatorily redeemable preferred
stock to a group of strategic and financial investors. The $32,667,000 of
consideration includes $24,850,000 of cash proceeds, $5,000,000 from the
conversion of our note payable from the former Series A preferred stockholder,
$317,000 from the conversion of a portion of our outstanding note payable from
the Connecticut Development Authority and $2,500,000 in television advertising
rights from National Broadcasting Company, Inc. We have also agreed to make our
wireless distribution services available to NBC Interactive Media Inc. and its
affiliates for use in connection with their interactive content offerings.
Upon completion of this offering, all outstanding shares of our preferred
stock will convert into shares of common stock. We believe that the net proceeds
from this offering, together with fundings 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.
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
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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.
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
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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.
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.
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.
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OUR BUSINESS
COMPANY OVERVIEW
We are a leading provider of timely personalized information to users of
wireless communications devices, such as mobile phones, pagers and personal
digital assistants, or PDAs, in North America. We believe that we are positioned
to capitalize on 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. 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 on both a one-way and interactive basis, as well as personal e-mail,
calendar and commerce applications.
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. We believe that we are the only provider offering wireless network
operators comprehensive, end-to-end solutions for the delivery of personalized
content and information services through their networks. We also offer enabling
solutions to Internet media networks and corporate enterprises seeking to expand
their Internet- or intranet-based services through wireless communications
networks. At December 15, 1999, we had over 450,000 users of our products and
services of which over 100,000 were paying subscribers.
We are currently providing private label and co-branded 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 43 million wireless phone subscribers at
June 30, 1999, or more than 50% of the total North American market of wireless
phone users. These wireless network operators include AirTouch Cellular, AT&T
Wireless Services, Inc., Bell Mobility Cellular, Inc. (Canada), Omnipoint
Communications Services, and SBC Communications, including its subsidiaries
Southwestern Bell Mobile Systems, Inc., Pacific Bell and others. 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 sub-brand with lower capital requirements
than would be possible 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. 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
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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:
- the rapid growth of digital wireless communications networks and
subscribers;
- the development of the Internet as a commercial medium and resource for
real-time personalized information and entertainment;
- the shift in media away from traditional broad-based content distribution
to more localized, segmented and targeted formats that more effectively
address user and advertiser needs; and
- the development of software, applications and standard specifications
supporting mobile data communications.
GROWTH IN WIRELESS COMMUNICATIONS
The wireless telephony 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. The United States currently lags
many countries in Western Europe and Asia in both penetration of wireless
subscribers and the rate of growth in aggregate penetration. We believe the
principal drivers of the rapid growth of wireless subscribers are:
- technological advancements which have reduced the cost and improved the
quality and functionality of both wireless network infrastructure and
end-user wireless devices;
- increased geographic coverage of wireless networks;
- the convenience and utility of wireless telephony relative to wired
alternatives; and
- widespread acceptance of wireless communications into every day business
and personal life.
As wireless network coverage has expanded, the availability and
functionality of wireless service has increased significantly. The factors
discussed above are contributing to accelerating subscriber penetration and
increased usage per subscriber. This is particularly evident within certain
demographic groups, such as the white-collar workforce, where wireless
communication has become an important business tool. The Gartner Group estimates
that at September 30, 1999, one-third of the workforce in the United States
subscribed to wireless phone service.
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.
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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. This user growth and
revenue potential have increased and expanded the availability of Internet
content and service offerings, including e-mail, financial information and
transactions, news, wholesale and retail sales, educational information and
entertainment applications. These applications have positioned the Internet as a
necessary daily resource of information for a substantial portion of the
population.
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 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. Initially,
newspapers and magazines, and later radio and broadcast television, created
content that appealed to a mass audience, driven by advertising revenue as the
primary source of revenue for the content creator. 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. For example, radio developed all-news stations and then
all-sports stations. Cable television migrated to a subscription-based revenue
model and developed multiple channels addressing the needs and interests of more
defined groups. 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
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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 micro-browser standards such as WAP and specific applications and
content designed for the wireless environment have enabled the critical link
between information available on the Internet and wireless networks. New
generations of wireless transmission technologies, including those commonly
referred to as 2.5G and 3G, promise to dramatically increase the capacity and
speed of wireless networks and expand the functionality and the range of
applications available in the wireless data medium to levels equal to or
exceeding those available from wireline networks.
THE i3 MOBILE SOLUTION
As dependence on access to information, e-mail services, corporate
intranets and other Internet-based services increases, we believe that mobile
individuals will 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 telephony technologies
to enable the distribution of personalized information through this new mobile
data medium. We believe that we provide comprehensive solutions 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 customized information profiles through wireless network
operators and i3 co-branded Web sites and interactive voice response systems. 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 provides substantial value to mobile individuals.
WIRELESS NETWORK OPERATORS
Wireless network operators are seeking to offer data services in addition
to voice telephony 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
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network operators must provide personalized data products as well as customer
service and billing.
We believe that we are the only comprehensive end-to-end provider offering
wireless network operators a complete solution for the delivery of personalized
content and information services to their subscribers. We have agreements with
many leading providers of news, financial, weather, sports, and other sources of
information, such as the Associated Press, Dow Jones, The Weather Channel,
SportsTicker, and Fox News, and can bundle these products and offer them in
packages customized for wireless network operators. We offer wireless network
operators content aggregation, applications development and integration, content
filtering and parsing, individual customer profiling and personalization,
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.
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, or WAP, a series of specifications that allow wireless phones to
display Internet-based information. Further, because our technology allows
messaging to devices using new technologies, we provide wireless network
operators with a migration path to Internet browsing 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. We have direct relationships with a number of
leading wireless network operators representing more than 50% of the market for
wireless phone users in North America. In addition, our technology can deliver a
message initiated by any of our Internet media networks or corporate enterprise
distributors to any Short Message Service, or SMS, enabled digital handset. 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 SMS
applications, UP.Link, WAP, microbrowser 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
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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, or ADMATTs, 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.
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[i3 Mobile, Inc. FLOW CHART]
Description of Artwork:
The headline at the top reads: "i3 Mobile, Inc."
Below the headline, there are the following three headings (from left to
right): "Aggregation," "Personalization," and "Distribution."
Below the heading, "Aggregation," is a box containing the following text:
"Filtering & Parsing Engines: Content & Advertising" Below the box is a
graphic in the shape of an arrow pointing to the box. This arrow graphic
contains the following text:
"Raw Data Feeds: Ascii, HTML, XML and Others."
Below this arrow graphic is a connected box containing the following text
separated by lines:
"Content Providers", "Media", "Enterprise Data", "Advertising", and "E-
Commerce."
Below the heading, "Personalization," is a box containing the following
text:
"Personal Profile Database"
Below the box is a graphic in the shape of an arrow pointing to the box and
to another box below the arrow. This next box contains the following text:
"WWW, Voice & Device-Based Provisioning."
Below this box is an arrow graphic containing the following text: "Needs,
Interests." This arrow graphic also points to a "stick figure" image labeled
"Mobile Individual."
Below the heading, "Distribution," is a box containing the following text:
"Universal Messaging Gateway"
Below the box are three graphics in the shape of arrows pointing to the box
and to another box below the arrow. The three arrow graphics contain the
following text (going left to right): "SMS", "WAP/UP.Link" and "Voice." The next
box below these arrow graphics contains the following text separated by lines:
"Wireless Networks", "PCS", "Digital Cellular", "Paging" and "Wireless
ISPs".
To the left of this box are three arrow graphics pointing to three graphics
of wireless devices: wireless phone, pager and personal digital assistant. Next
to these wireless device graphics is an arrow which points to the previously
described "stick figure" image labeled "Mobile Individual."
At the bottom of the page are three boxes containing the following text:
- Universal wireless publishing and distribution for Content Providers
- Marriage of content and wireless provides personalized services for the
Mobile Individual
- Single source for aggregated content and services for Wireless Network
Operators
Below these three boxes is the following text:
"Benefits to Constituent."
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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 AS THE SINGLE-SOURCE WIRELESS PORTAL FOR OUR DISTRIBUTORS
We intend to become our distributors' principal data services provider and
the integrator of content and information services to the distributors' customer
base by providing innovative, Web-based, value-added products and services and
electronic commerce applications. 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 WAP and Internet browsing
capabilities.
CONTINUE TO BUILD COMPELLING PRODUCTS
We will continue to build compelling 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 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 iii(TM)" 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 increase the number of our distribution
relationships both domestically and on a global basis in order to increase our
user base and develop diversified distribution channels. We have established
distribution relationships with more than 15 wireless network operators,
collectively representing approximately 43 million wireless phone subscribers at
June 30, 1999, or more than 50% of the total North American market of wireless
phone users, and we believe that we can leverage these relationships to migrate
our
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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 have identified enterprises such as Internet auction, banking,
portal and stock-trading sites as potential clients for our services and believe
that we can enable these businesses to communicate and interact with their
customers via wireless devices.
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
secured a mix of exclusive and non-exclusive licenses and anticipate securing
additional licenses to enable us to deliver turnkey solutions and platforms to
digital content providers. The technologies underlying these licenses include
critical security and authentication capabilities. We believe that these
licenses give us a strategic advantage to become a leading provider of wireless
electronic commerce transactions in a secure environment.
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
WAP-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 PDAs.
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.
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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
specific information profiles through co-branded interactive Web sites,
interactive telephone response systems, phone-based Internet microbrowsers or
our own or distributors' customer service centers. 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. 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
ABCNews.com, Bloomberg.com, ESPN.com, Excite.com or The Weather Channel. Users
must first register for our service by visiting a distributor's Web site which
we co-brand and host or by calling a customer service center. 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.
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 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.
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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 SMS and menu-driven microbrowser capabilities, including WAP and
Phone.com's UP.Link, 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
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 scaleable system
has 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
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which our users subscribe. The following are some of 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 i3 derived from revenue
generated from the content they provide, the number of content messages
requested or a combination of the four. Some of the content providers with which
we have existing relationships, either directly or through wireless network
operator distributors, include:
ABCNews.com
American Stock Exchange
Accu Weather
Associated Press:
- AP Wire
- LATAM (Latin American)
Bloomberg L.P.
Canadian Exchange Group
Canadian Press
COMTEX Scientific Corporation
- Agence France Presse
- Business Wire
- Knight Ridder
- PRNewswire
- Thomson Publishing
- Ziff Davis Wire
Dow Jones
Environment Canada
ESPN.com
Excite.com
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.
Sacramento Bee
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.
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Advertising. In many cases, we have the capacity to attach advertising
taglines to the end of content messages being delivered to individuals. Our
patent-pending engine system, ADMATTs, 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.
Initially, we believe that this new advertising medium will be compared in
scope and pricing to the Internet. As such, we believe we have established our
advertising rates to compare favorably with average Internet portal cost-per-
thousand impressions rates. 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
solutions.
When used by Internet electronic commerce sites, we believe our technology
enhances the level of user interaction and service, as the relationship with the
customer is no longer confined to desktop transactions. 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 solutions. We believe revenue from enabling
electronic commerce companies for wireless transactions can include fee-based
development activities, per-transaction pricing, and receiving a portion of
revenue generated from goods or services sold.
For example, 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.
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E-mail and Personal Information Management Applications. We believe that
e-mail and personal calendar information are among the most important content
services for mobile individuals. Our e-mail development efforts are focused on
adding additional filtering features and other functionality to our e-mail
gateway platform. 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. 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 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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Some of the wireless network operators with which we have distribution
relationships include:
<TABLE>
<S> <C>
AT&T Wireless 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
</TABLE>
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 Cahners Business Information/Wireless Week, RotoNews and The
Weather Channel/Wireless Weather. We are in discussions with additional
businesses such as Internet auction, banking, portal and stock-trading sites to
enable these 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 providing a complete outsource
solution 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. 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 solutions to their employees and/or
customers include banking, stock trading, healthcare, package delivery and
manufacturing. For example, an enterprise could notify a user on their wireless
device of the results of medical laboratory tests or the time a package was
delivered to the recipient, or, in the case of an auction site, users could use
their wireless devices to receive auction updates. We can derive revenues by
charging fees to complete a
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transaction even in those cases where we may not receive a portion of the
revenues of the actual sale.
OUR END-TO-END SOLUTION FOR OUR DISTRIBUTORS
We believe that we are the only comprehensive end-to-end provider of
wireless data services offering wireless network operators, Internet media
networks and corporate enterprise distributors a complete solution for the
delivery of personalized content and information. We offer these distributors
several critical components with which to build co-branded wireless portals. We
typically provide all of the following services to our wireless network operator
relationships, and generally provide 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 individual profiles or interactive requests.
- Profiling and Personalization. We maintain individual information,
network, and device profiles for each of our more than 450,000 users.
These profiles detail information which the user has indicated is of
personal value. Our 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 customized interactive voice response systems
with many of our distributors. In some cases, we create proprietary
protocols with our distributors to accommodate unique infrastructure and
high transport volume.
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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 iii(TM)" 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 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. We offer a cooperative advertising
program for distributors who offer our services under the "Powered by
iii(TM)" sub-brand. Through this program, we provide reimbursement for
advertising and promotional materials used to support the sale of our
services to mobile individuals.
- Market Development Funds. We make available market development funds 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.
- 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.
- "Powered by iii(TM)" 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
robust, scalable and 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 profile
provisioning and personalization system, and our wireless delivery gateway.
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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 modular
scalability so that our current architecture can accommodate more content,
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 flat text files,
tab-delimited files, HTML, XML or any other number of content syndication
formats. We retrieve data from content providers under license through auto-ftp
robots or our own proprietary HTML filtering technology, or we 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 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 proprietary system, ADMATTs, our
advertising and 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.
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PROFILE PROVISIONING AND PERSONALIZATION SYSTEM
We allow our end users to create personalized profiles through Web-based
interfaces, interactive voice response systems and microbrowser-based
interfaces. We provide updated user profiles in each of these systems, and
automatically reflect user-initiated changes made in one system in each of the
other systems. We handle secure credit card transactions through Web-based, IVR
and handset microbrowser interfaces.
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 Web-based system will employ a
distributed application model for even greater scalability and performance.
Each of our user's personalized information profiles 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 scalability and can currently handle more than four times the 450,000
profiles we currently service.
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 SMS, including
SMPP, UCP, SMTP, SNPP, TNPP, TAP and others. The gateway also supports the
protocols and mark-up languages compatible with Phone.com's UP.Link servers and
microbrowsers, and the WAP servers and microbrowsers of various other
manufacturers. Our gateway provides delivery through all major wireless
networks, including the CDMA, TDMA, GSM, iDEN, Mobitex, Flex, ReFlex, RAM and
other air interfaces.
We have written applications in the WML, HDML, VxML, and VoxML mark-up
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 WAP-enabled handset to become a platform for two-way interactive services such
as directory lookups 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 by the end of the first quarter of 2000.
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
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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 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 WAP Forum, we have agreed to license our intellectual
property to other WAP 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 WAP Forum. Each other member of the WAP Forum
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
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our efforts on new wireless telephones, pagers and PDAs, and on creation of
products that work in conjunction with UP.Link, WAP, the Palm OS and associated
network browsing solutions, 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
alliances with several companies and organizations. Our relationships with these
companies are strategic in nature. 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, or SMSC, manufacturers Logica
Aldiscon and ADC NewNet, and Comverse, and Wireless Application Protocol gateway
and microbrowser manufacturers Nokia, Phone.com and CMG Telecommunications. For
example, we are one of a select number of North American WAP application
developers selected to work with Nokia and, as part of that relationship, we
jointly showcase our offerings at major industry trade fairs. In addition, we
have development agreements with location-based technology provider SignalSoft,
transaction security provider Diversinet and voice recognition and browser
technology provider Nuance Communications. We have also entered into
distribution relationships with Neopoint and Motorola. Each of these
relationships has been developed in order to further our product offerings and
means of distribution.
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 and potential competitors include:
- wireless data providers and portals, such as Wireless Knowledge, a joint
venture of Microsoft Corporation and Qualcomm Incorporated, MSN Mobile,
Datalink, Airflash, Phone.com, Microsoft Corporation, Yahoo!, Inc.,
InfoSpace.com and Saraide.com;
- entities that have announced their intentions to become wireless data
providers, such as America Online, Inc. and TIBCO Software Inc.;
- wireless financial services providers, such as Aether Systems, Inc. and
724 Solutions, Inc.; and
- wireless network operators, such as AT&T Wireless, Bell Atlantic Mobile,
Metricom, Inc., Nextel Communications, Inc., Omnipoint Communications
Services and Sprint PCS.
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
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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 FCC 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
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.
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INTELLECTUAL PROPERTY RIGHTS
We have filed an application to register the mark "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
ADMATTs, 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 $100,000 upon signing the agreement in
1999 and will pay an additional $75,000 to Portel in January 2000. 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 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 WAP Forum, we have agreed to license our intellectual
property to other WAP members on fair and reasonable terms to the extent that
the license is required to develop non-infringing products under the
specifications
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promulgated by the WAP Forum. Each other member of the WAP Forum has entered
into a reciprocal agreement.
EMPLOYEES
As of December 31, 1999, we had 69 full-time employees and 2 part-time
employees. 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 December 31, 1999 are as follows:
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS AND DIRECTORS AGE POSITION
- -------------------------------- --- --------
<S> <C> <C>
Stephen G. Maloney.............. 42 President, Chief Executive Officer
and Director
Robert M. Unnold................ 52 Chairman of the Board
Michael Forbes.................. 38 Vice President, Marketing
Richard J. Rutkowski............ 48 Vice President, Technology and
Systems
Alan Katzman.................... 39 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 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
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 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/
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Mobilecomm for the New York market. Mr. Unnold also founded Mincron SBC
Corporation, a software company, of which he was President and a director from
1979 to 1989 until its sale in 1999.
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., 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'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
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 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 Keystone
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Venture Capital portfolio companies. Mr. Dale also serves on the advisory board
of Jefferson Bank.
JAMES A. JOHNSON was elected a director of i3 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 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 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 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. 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.
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.
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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 Unnold. 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
Our compensation committee consists of Messrs. Christino, Dale, Grimes and
Unnold. 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. 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 the three other most highly paid executive
officers of i3 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
Kevin W. Ryan.................. 20,500 3.8% $3.44 2009
</TABLE>
- -------------------------
(1) All options were granted under our 1995 Stock Option Plan. All options were
incentive stock options which vest in annual installments over 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
initial public offering price, 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.
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
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<PAGE> 72
based on the assumed initial public offering price of $ 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
Robert M. Unnold............ 12,500 12,500
Jeffrey N. Klein............ 57,340 46,760
Kevin W. Ryan............... 13,100 25,400
</TABLE>
1995 STOCK OPTION PLAN
We adopted the 1995 Stock Option Plan on November 7, 1995. The plan
provides for grants of options to our designated employees, officers, directors
and consultants.
GENERAL. The plan, as amended, authorizes options to purchase up to
1,014,000 shares of our common stock. If options granted under the plan 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 plan.
ADMINISTRATION OF THE PLAN. The Board of Directors administers and
interprets the plan. The Board has the sole authority to:
- determine the employees and officers and consultants to whom grants will
be made under the plan;
- 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 plan.
TYPES OF GRANTS. Grants under the plan 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.
ELIGIBILITY FOR PARTICIPATION. Grants may be made to any of our employees,
officers, directors and consultants. As of December 31, 1999, there were options
to purchase 918,485 shares of our common stock granted under the plan at
exercise prices ranging from $0.30 per share to $4.00 per share.
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<PAGE> 73
TERMS OF OPTIONS. 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
our common stock on the date of grant, provided that:
- 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.
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 granted, 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.
AMENDMENT AND TERMINATION OF THE PLAN. The board may amend or terminate
the plan 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 plan (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 plan;
- decreases the minimum purchase price at which options or rights may be
granted;
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<PAGE> 74
- extends the maximum term of options or rights granted under the plan;
- extends the term of the plan; or
- materially increases the benefits accruing to participants under the plan
who are subject to liability under Section 16(b) of the Exchange Act.
The board may terminate the plan at any time; provided, however, that the
term of the plan may not be longer than ten years from its commencement date.
TAX CONSEQUENCES. The following description of the tax consequences of
awards under the 1995 Stock Option Plan is based on present federal tax laws and
does not purport to be a complete description of the tax consequences of the
1995 Stock Option Plan. 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 plan has been approved 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 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
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<PAGE> 75
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 80% 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 death or disability of each individual.
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, up to a maximum of $500,000, of which he has received $29,000 as of
September 30, 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.
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<PAGE> 76
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SALES OF OUR SECURITIES
Pursuant to a stock purchase agreement dated February 12, 1999, we sold a
total of 9,643.2 shares of our Series E mandatorily redeemable convertible
preferred stock to BG Media Investors L.P. for 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. Mr. Grimes, one
of our directors, is a member of BG Media Investors LLC, the General Partner of
BG Media Investors L.P. The Series E mandatorily redeemable convertible
preferred stock will convert into 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 an aggregate purchase price of $3,000,000. 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.
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 an aggregate purchase price of $1,001,000 in cash and notes payable. 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. The Series
D mandatorily redeemable convertible preferred stock will convert into 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.
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<PAGE> 77
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 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
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<PAGE> 78
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.
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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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding ownership of
our common stock, as of December 31, 1999, 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 December 31, 1999, 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%
Stephen M. Maloney.................... 1,484,166(2) 8.7
Donald F. Christino................... 1,080,429(3) 6.3
W. Peter Daniels...................... 220,000 1.3
Jeffrey N. Klein...................... 57,340(4) *
Kevin W. Ryan......................... 13,100(4) *
Kerry J. Dale......................... 2,089,073(5) 11.8
c/o Keystone Venture IV, L.P.
1601 Market Street
Suite 2500
Philadelphia, PA 19103
James A. Johnson...................... 637,719(6) 3.7
c/o Apex Management III, LLC
233 Wacker Drive, Suite 900
Chicago, IL 60606
J. William Grimes..................... 4,821,600(7) 28.2
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
1601 Market Street
Suite 2500
Philadelphia, PA 19103
BG Media Investors L.P. .............. 4,821,600 28.2
399 Park Avenue, 19th Floor
New York, NY 10022
MCI WorldCom, Inc..................... 1,131,250(9) 6.4
500 Clinton Center Drive Clinton, MS
39056
All directors and officers as a group
(13 persons)........................ 12,611,875 69.9
</TABLE>
- -------------------------
* less than 1% (one percent).
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(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 1,063,000 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 III 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 III 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 III 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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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 the closing 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. 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. 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
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<PAGE> 82
impediments with respect to any changes in control or to dilute the stock
ownership of holders of common stock seeking to obtain control.
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: (i) Robert
M. Unnold, Stephen G. Maloney, Donald F. Christino and W. Peter Daniels, as a
group, (ii) BG Media Investors L.P., (iii) Apex Investment Fund II L.P. and Apex
Strategic Partners, LLC, as a group, and (iv) 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 an aggregate of
1,014,000 shares of stock may be granted under the 1995 Stock Option Plan. There
are 918,485 options outstanding under the plan at a weighted average exercise
price of $2.71 per share, of which 329,512 will be exercisable upon the
completion of this offering. Other than these options, we have not granted any
other options. Of these shares, shares will be immediately available for
sale in the public market 180 days after the date of this prospectus and the
balance of the shares will be available for sale upon our filing of a
registration statement after the offering relating to our stock options held by
officers, directors, employees and consultants. 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> 83
WARRANTS
As of the date of this prospectus, warrants were outstanding for the
purchase of 1,929,084 shares of common stock at a weighted average exercise
price of $3.50. Warrants to purchase up to an additional 110,000 shares of our
common stock may also be granted to NBC Interactive Media, Inc. or its
affiliates in connection with any definitive distribution agreements which may
be entered into in the future between i3 and NBC Interactive Media, Inc. or its
affiliates.
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 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 and could discourage potential acquisition proposals.
INDEMNIFICATION
Our certificate of incorporation provides that no director of i3 shall have
any personal liability to i3 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 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 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
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<PAGE> 84
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.
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
We have applied to list our shares of common stock on the Nasdaq National
Market under the symbol "IIIM."
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<PAGE> 85
SHARES ELIGIBLE FOR FUTURE SALE
Following this offering, we will have shares of common stock
outstanding. If the underwriters exercise their over-allotment option in full,
we will have 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 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 shares sold in the offering
will be immediately available for sale in the public market;
- 180 days after the date of this prospectus, approximately
shares will be eligible for sale, of which will be
subject to volume, manner of sale and other limitations under Rule 144;
and
- the remaining 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 Option 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 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.
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
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<PAGE> 86
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 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
918,485 shares of common stock to specified persons pursuant to our option plan.
We intend to file, after the effective date of this offering, a registration
statement on Form S-8 to register approximately shares of common stock
reserved for issuance under our stock option plan. The registration statement on
Form S-8 will become effective automatically upon filing.
Shares issued under our 1995 Stock Option 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> 87
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, the
underwriters named below, through their representatives Deutsche Bank 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. ..............................
Credit Suisse First Boston Corporation......................
--------
Total..................................................
========
</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
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 shares
are being offered.
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. 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:
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<PAGE> 88
<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..............
</TABLE>
In addition, we estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will be
approximately $ .
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 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 shares for our directors, officers,
employees, vendors, customers and other third parties. The number of shares of
our common
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<PAGE> 89
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.
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 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. BT Investment Partners, Inc. has
agreed not to transfer any of its shares of common stock to any non-affiliated
third party for a period of 180 days after the date of this prospectus. 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. Upon exercise of these registration rights, the
holders of the Series F mandatorily redeemable preferred stock 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.
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.
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, 1998 and 1997 and
for each of the three years in the period ended December 31, 1998 and as of and
for the nine months ended September 30, 1999 included in this prospectus have
been so included in reliance on the report of PricewaterhouseCoopers LLP,
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<PAGE> 90
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.
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<PAGE> 91
INTELLIGENT INFORMATION INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheet as of December 31, 1997, 1998 and
September 30, 1999.......................................... F-3
Consolidated Statement of Operations for the years ended
December 31, 1996, 1997 and 1998 and for the nine months
ended September 30, 1998 (unaudited) and September 30,
1999...................................................... F-4
Consolidated Statement of Stockholders' Deficit for the
years ended December 31, 1996, 1997 and 1998 and for the
nine months ended September 30, 1999...................... F-5
Consolidated Statement of Cash Flows for the years ended
December 31, 1996, 1997 and 1998 and for the nine months
ended September 30, 1998 (unaudited) and September 30,
1999...................................................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 92
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Intelligent Information Incorporated
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
Intelligent Information Incorporated at December 31, 1997 and 1998 and September
30, 1999, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1998 and for the nine months
ended September 30, 1999, in conformity with generally accepted accounting
principles. 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 generally accepted auditing standards 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
December 10, 1999
F-2
<PAGE> 93
INTELLIGENT INFORMATION INCORPORATED
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
DECEMBER 31, ----------------------
----------------- PRO FORMA
1997 1998 ACTUAL (NOTE 2)
------- ------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 215 $ 166 $ 4,000 $ 4,000
Accounts receivable, net of allowances (Note 2)........... 119 441 470 470
Notes receivable -- related parties (Note 9).............. - - 100 100
Prepaid expenses and other current assets................. 11 11 80 80
------- ------- -------- --------
Total current assets............................... 345 618 4,650 4,650
Fixed assets, net (Note 4)................................ 14 50 197 197
Intangible assets, net (Note 2)........................... - - 169 169
Deposits.................................................. 16 14 426 426
------- ------- -------- --------
Total assets....................................... $ 375 $ 682 $ 5,442 $ 5,442
======= ======= ======== ========
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.......................................... $ 138 $ 169 $ 266 $ 266
Accrued liabilities (Note 5).............................. 98 244 752 752
Deferred revenue (Note 2)................................. 176 131 - -
Deferred revenue -- related parties (Note 9).............. 58 49 133 133
Current portion of long-term debt (Note 6)................ 107 118 130 5,130
Notes payable -- trade (Note 6)........................... 184 250 - -
Notes payable -- related parties (Note 9)................. 117 344 - -
------- ------- -------- --------
Total current liabilities.......................... 878 1,305 1,281 6,281
Long-term debt (Note 6)..................................... 573 455 5,348 348
------- ------- -------- --------
Commitments and contingencies (Note 8)
Total liabilities.................................. 1,451 1,760 6,629 6,629
------- ------- -------- --------
Mandatorily redeemable convertible preferred stock (Note
10)....................................................... 1,412 2,500 16,134 -
------- ------- -------- --------
Stockholders' deficit:
Convertible preferred stock (Note 10)..................... - - - -
Common stock; $.01 par value, 25,000,000 shares
authorized, 7,554,000, 7,554,000, 7,554,000 and
12,685,280 shares issued................................ 76 76 76 127
Additional paid-in capital................................ 2,398 4,530 4,601 20,684
Notes receivable from stockholders (Note 9)............... - (53) (37) (37)
Deferred compensation..................................... - - (73) (73)
Accumulated deficit....................................... (4,962) (8,131) (17,658) (17,658)
Treasury stock at cost, 1,885,000 shares.................. - - (4,230) (4,230)
------- ------- -------- --------
Stockholders' deficit..................................... (2,488) (3,578) (17,321) (1,187)
------- ------- -------- --------
Total liabilities, mandatorily redeemable
convertible preferred stock and stockholders'
deficit.......................................... $ 375 $ 682 $ 5,442 $ 5,442
======= ======= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 94
INTELLIGENT INFORMATION INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------- ---------------------
1996 1997 1998 1998 1999
------- ------- ------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenue -- trade.............. $ 428 $ 676 $ 1,245 $ 914 $ 1,302
Net revenue -- related parties.... 217 149 160 109 23
------- ------- ------- ------- -------
Net revenue....................... 645 825 1,405 1,023 1,325
Cost of revenue................... 465 671 762 621 673
------- ------- ------- ------- -------
Gross profit...................... 180 154 643 402 652
------- ------- ------- ------- -------
Operating expenses:
Sales and marketing............. 180 234 584 382 1,278
General and administrative...... 1,327 2,287 2,625 2,012 3,256
------- ------- ------- ------- -------
Operating expenses................ 1,507 2,521 3,209 2,394 4,534
------- ------- ------- ------- -------
Operating loss.................... (1,327) (2,367) (2,566) (1,992) (3,882)
Interest income................... (19) (15) (6) (1) (167)
Interest expense.................. 9 88 323 178 409
Interest expense -- related
parties......................... 2 8 12 51 48
------- ------- ------- ------- -------
Net loss.......................... (1,319) (2,448) (2,895) (2,220) (4,172)
------- ------- ------- ------- -------
Redemption of preferred stock..... - - - - (3,665)
------- ------- ------- ------- -------
Dividends on mandatorily
redeemable preferred stock...... (8) (76) (274) (215) (1,690)
------- ------- ------- ------- -------
Loss applicable to common stock... $(1,327) $(2,524) $(3,169) $(2,435) $(9,527)
======= ======= ======= ======= =======
Net loss per share -- basic and
diluted......................... $ (0.18) $ (0.33) $ (0.42) $ (0.32) $ (1.60)
======= ======= ======= ======= =======
Shares used in computing net loss
per share....................... 7,552 7,554 7,554 7,554 5,966
======= ======= ======= ======= =======
Pro forma net loss per share --
basic and diluted (Note 2)
(unaudited)..................... $ (0.28) $ (0.39)
======= =======
Shares used in computing
pro forma net loss per share
(Note 2) (unaudited)............ 10,455 10,785
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 95
INTELLIGENT INFORMATION INCORPORATED
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 DEFERRED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL STOCKHOLDERS COMPENSATION
------ ------ ------ ------ --------- ------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1996............................. 3,770 $- - $- 7,540,000 $75 $1,237 $ - $ -
Issuance of common
stock........................... - - - - 14,000 1 25 - -
Issuance of warrants with Series
B preferred stock............... - - - - - - 90 - -
Issuance of warrants to debt
holders......................... - - - - - - 95 - -
Accretion of preferred
dividends....................... - - - - - - - - -
Net loss......................... - - - - - - - - -
------ -- ----- -- --------- --- ------ ---- ----
Balance at December 31, 1996..... 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) - -
Repayment of notes receivable
from shareholders............... - - - - - - - 16 -
Issuance of warrants to debt
holders......................... - - - - - - 100 - -
Accretion of preferred stock
dividends....................... - - - - - - - - -
Deferred compensation - stock
options......................... - - - - - - 76 - (76)
Amortization of deferred
compensation.................... - - - - - - - - 3
Net loss......................... - - - - - - - - -
------ -- ----- -- --------- --- ------ ---- ----
Balance at September 30, 1999.... - $- 2,194 $- 7,554,000 $76 $4,601 $(37) $(73)
====== == ===== == ========= === ====== ==== ====
<CAPTION>
ACCUMULATED TREASURY
DEFICIT STOCK TOTAL
----------- -------- -----
<S> <C> <C> <C>
Balance at January 1,
1996............................. $ (1,111) $ - $ 201
Issuance of common
stock........................... - - 26
Issuance of warrants with Series
B preferred stock............... - - 90
Issuance of warrants to debt
holders......................... - - 95
Accretion of preferred
dividends....................... (8) - (8)
Net loss......................... (1,319) - (1,319)
-------- ------- --------
Balance at December 31, 1996..... (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)
Repayment of notes receivable
from shareholders............... - - 16
Issuance of warrants to debt
holders......................... - - 100
Accretion of preferred stock
dividends....................... (1,690) - (1,690)
Deferred compensation - stock
options......................... - -
Amortization of deferred
compensation.................... - - 3
Net loss......................... (4,172) - (4,172)
-------- ------- --------
Balance at September 30, 1999.... $(17,658) $(4,230) $(17,321)
======== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 96
INTELLIGENT INFORMATION INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------- ----------------------
1996 1997 1998 1998 1999
------- ------- ------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss................................................ $(1,319) $(2,448) $(2,895) $(2,220) $(4,172)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization....................... 11 45 19 12 72
Amortization of debt discount....................... - 23 35 30 14
Other............................................... (8) 90 459 374 231
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable........ 39 (106) (390) (311) (160)
(Increase) decrease in other current assets and
other assets.................................... 36 3 2 2 (481)
Increase (decrease) in accounts payable........... 52 76 31 (75) 22
(Decrease) increase in accrued liabilities........ (8) 31 149 345 508
Increase (decrease) in deferred revenue........... 329 (95) (54) (73) (47)
------- ------- ------- ------- -------
Net cash used in operating activities................... (868) (2,381) (2,644) (1,916) (4,013)
------- ------- ------- ------- -------
Cash flows from investing activities:
Acquisition of business............................... (98) - - - -
Purchase of intangible asset.......................... - - - - (100)
Purchase of fixed assets.............................. (1) (17) (57) (57) (210)
------- ------- ------- ------- -------
Net cash used in investing activities................... (99) (17) (57) (57) (310)
------- ------- ------- ------- -------
Cash flows from financing activities:
Proceeds from sales of preferred stock, net........... 1,220 1,129 2,154 1,769 11,944
Proceeds from issuance of notes payable - trade....... 750 200 650 650 -
Proceeds of issuance of notes payable - related
parties............................................. - 117 227 27 -
Proceeds from sale of common stock.................... 25 - - - -
Repurchase of common and preferred stock.............. - - - - (3,000)
Repayments of notes payable........................... - - (326) (679) (703)
Issuance of notes receivable - related parties........ - - (53) - (200)
Repayments of notes receivable - related parties...... - - - - 116
------- ------- ------- ------- -------
Net cash provided by financing activities............... 1,995 1,446 2,652 1,767 8,157
------- ------- ------- ------- -------
Increase (decrease) in cash and cash equivalents........ 1,028 (952) (49) (206) 3,834
Cash and cash equivalents at beginning of period........ 139 1,167 215 215 166
------- ------- ------- ------- -------
Cash and cash equivalents at end of period.............. $ 1,167 $ 215 $ 166 $ 9 $ 4,000
======= ======= ======= ======= =======
Supplemental disclosures of cash flow and non cash
activities:
Interest paid in cash................................. $ 2 $ 63 $ 88 $ 65 $ 119
Conversion of debt to mandatorily redeemable
preferred stock..................................... $ - $ - $ 400 $ 400 $ -
Conversion of preferred stock for debt................ $ - $ - $ - $ - $ 5,000
Accretion of preferred stock dividends................ $ 8 $ 76 $ 274 $ 215 $ 1,690
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 97
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
NOTE 1 -- FORMATION AND OPERATIONS OF THE COMPANY:
Intelligent Information Incorporated ("III" or the "Company") 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 product
introductions, all of which could impact the future value of the Company's
assets. Operating results for the nine months ended September 30, 1999 are not
necessarily indicative of results that may be expected for the year ended
December 31, 1999.
UNAUDITED INTERIM FINANCIAL STATEMENTS:
The unaudited statements of operations and cash flows for the nine months
ended September 30, 1998 have been prepared in accordance with generally
accepted accounting principles for interim financial information and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles. The unaudited
financial statements include, in the opinion of management, all adjustments,
consisting only of normal recurring adjustments, that are considered necessary
for the fair presentation of the information in the financial statements. All
footnote disclosures included in these financial statements related to the nine
months ended September 30, 1998 are unaudited.
F-7
<PAGE> 98
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
UNAUDITED PRO FORMA BALANCE SHEET:
Upon the closing of the Company's anticipated initial public offering, each
outstanding share of preferred stock, other than Series C preferred, 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. Additionally, a long-term note payable for $5,000
becomes immediately due and payable upon the Company's anticipated initial
public offering (Note 6). Both transactions have been reflected in the unaudited
pro forma balance sheet as if they occurred on September 30, 1999. These pro
forma amounts do not include the subsequent event transactions included in Note
13 and Note 14.
CASH AND CASH EQUIVALENTS:
Cash equivalents consist of highly liquid investments purchased with an
initial maturity of three months or less.
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.
PRODUCT DEVELOPMENT COSTS/RESEARCH AND DEVELOPMENT:
Product 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 undiscounted 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. In December of 1997, the Company wrote off $64 of goodwill
related to the termination of the operations of Strategic Communications
Corporation ("SCC").
F-8
<PAGE> 99
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
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 September 30, 1999, the accumulated amortization for the intangible asset was
$7.
REVENUE RECOGNITION:
The majority of the Company's revenues relate to their subscription based
services. 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
rendered or provided to subscribers or resellers. Deferred revenue is comprised
of payments received from the Company's resellers in advance of wireless
information services being rendered. 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.
COST OF REVENUES:
Cost of revenues consists primarily of costs associated with purchasing
content, royalty payments 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. At September 30, 1999,
the Company's largest customer balance comprised 35% of the total outstanding
accounts receivable balance.
F-9
<PAGE> 100
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
Total net revenue for the year ended December 31, 1996 from SkyTel
Communications, Inc. and US Healthcare, Inc. was $217 and $157, respectively.
Each of these customers comprised over 10% of total net revenues in 1996.
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 nine months ended September 30, 1998 from
Omnipoint Communications, Inc. and SkyTel Communications, Inc. was $313 and
$109, respectively. Each of these customers comprised over 10% of total net
revenues for the period.
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 nine months ended September 30, 1999 from
Omnipoint Communications, Inc. and Bell Mobility Cellular, Inc. was $470 and
$193, 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 $42, $110 and
$217 at December 31, 1997 and 1998 and September 30, 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.
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
F-10
<PAGE> 101
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
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 market 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,
1996, 1997 and 1998. Stock compensation expense was $3 for the nine months ended
September 30, 1999.
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 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, 1996, 1997 and 1998 and for the nine
months ended September 30, 1998 and 1999, options to purchase 119,500, 229,100,
387,205, 229,100 and 591,985 shares of common stock, respectively, preferred
stock convertible into 2,595,500, 3,169,500, 4,256,000, 3,852,500 and 6,228,280
shares of common stock, respectively, and warrants to purchase 178,000, 510,875,
1,206,859, 1,056,859 and 1,906,859 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 5,131,280 shares of common stock, as if the shares had converted
immediately upon their issuance. Dividends on mandatorily redeemable preferred
stock have been excluded from the calculation of pro forma basic and diluted
earnings per share.
F-11
<PAGE> 102
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
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
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.
NOTE 3 -- ACQUISITIONS:
In November 1996, the Company acquired 80% of the outstanding shares of
Strategic Communications Corporation ("SCC"). SCC provides real time mortgage
lending interest rates to its customers via wireless media. The acquisition was
accounted for using the purchase method and the assets and liabilities were
recorded at their fair value at the date of acquisition. Total consideration was
$98. The total goodwill recorded as a result of the acquisition of $93 was to be
amortized over a five-year period.
In November 1997, the Company suspended its funding of and,
correspondingly, the operations of 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.
F-12
<PAGE> 103
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
NOTE 4 -- FIXED ASSETS:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1997 1998 1999
<S> <C> <C> <C>
Furniture and fixtures.................. $24 $63 $ 63
Equipment and computers................. 12 8 218
--- --- ----
36 71 281
Less - Accumulated depreciation......... 22 21 84
--- --- ----
$14 $50 $197
=== === ====
</TABLE>
Depreciation expense related to fixed assets for the years ended December
31, 1996, 1997 and 1998 and for the nine months ended September 30, 1998 and
1999 was $8, $19, $19, $12 and $63, respectively.
NOTE 5 -- ACCRUED LIABILITIES:
The following table provides the major components of accrued liabilities:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1997 1998 1999
---- ---- -------------
<S> <C> <C> <C>
Accrued interest........................ $ - $ - $252
Accrued professional fees............... 43 108 106
Accrued salaries and wages.............. 47 38 90
Accrued content......................... - 50 68
Accrued marketing expense............... - - 142
Other accrued liabilities............... 8 48 94
--- ---- ----
$98 $244 $752
=== ==== ====
</TABLE>
F-13
<PAGE> 104
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
NOTE 6 -- DEBT:
Debt and notes payable - trade consisted of the following at December 31,
1997 and 1998 and September 30, 1999:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1997 1998 1999
<S> <C> <C> <C>
CURRENT PORTION OF LONG-TERM DEBT:
Five-year convertible note............ $126 $137 $ 149
Unamortized discount............. (19) (19) (19)
---- ---- ------
$107 $118 $ 130
==== ==== ======
NOTES PAYABLE - TRADE:
Demand note - December 1997......... $200 $ - $ -
Unamortized discount............. (16) - -
---- ---- ------
184 - -
Demand note - February 1998......... - 150 -
Demand note - April 1998............ - 100 -
---- ---- ------
$184 $250 $ -
==== ==== ======
LONG-TERM DEBT:
Five-year convertible note............ $630 $493 $ 372
Unamortized discount................ (57) (38) (24)
---- ---- ------
573 455 348
Five-year promissory note............. - - 5,000
---- ---- ------
$573 $455 $5,348
==== ==== ======
</TABLE>
In December 1996, the Company executed a five-year convertible note with a
State of Connecticut business financing organization, 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 has been recorded as a debt
discount and is being amortized over the term of the loan. The note bears
interest at a rate equal to the federal reserve rate for five year treasury
securities (6.07%, 5.77%, 4.45% and 5.80% at December 31, 1996, 1997 and 1998
and September 30, 1999) plus 2.5%. Principal payments under the terms of the
agreement commenced one year from the date of the agreement. The remaining
principal payments are as follows: 1999 -- $35; 2000 -- $149; 2001 -- $337.
Subsequent to July 1, 1999, the note is convertible into common stock at a price
of $2.46 per share at the option of the holder unless the Company repays the
note within five days of receiving notice of the holder's intent to convert. The
note has an effective interest rate of 11%. See Note 14 for related unaudited
subsequent event disclosure.
F-14
<PAGE> 105
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
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 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 against interest expense.
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 against
interest expense. These notes payable were converted in August 1998 into Series
D mandatorily redeemable convertible 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 ("IIP"). IIP is a
wholly owned subsidiary of SkyTel Communications, Inc., 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 IIP to purchase 500,000 shares of the Company's common
stock at a price of $3.00 per share (Note 11). See Note 14 for related unaudited
subsequent event disclosure.
F-15
<PAGE> 106
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
NOTE 7 -- INCOME TAXES:
No provision for federal or state income taxes has been made for the years
ended December 31, 1996, 1997 and 1998 and for the nine months ended September
30, 1999 given the Company's loss position in each year. At September 30, 1999,
the Company had net operating loss carryforwards of $10,645 which expire through
the year 2018. Net deferred tax assets at December 31, 1997 and 1998 and at
September 30, 1999 have been fully reserved due to the uncertainty of
realization.
The Company's gross deferred tax assets at December 31, 1997, 1998 and
September 30, 1999 were comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ SEPTEMBER 30,
1997 1998 1999
------- ------- -------------
<S> <C> <C> <C>
GROSS DEFERRED TAX ASSET:
Net operating loss carryforwards.... $ 2,003 $ 3,074 $ 4,719
Warrant issuances................. - 172 216
Interest accretion................ 10 26 143
Other............................. - 5 19
------- ------- -------
2,013 (3,277) (5,097)
Valuation allowance............... (2,013) (3,277) (5,097)
------- ------- -------
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 September 30, 1999, the minimum annual rental payments under the
terms
F-16
<PAGE> 107
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
of such noncancelable leases which expire at various dates through 2008 are as
follows:
<TABLE>
<S> <C>
1999.................................................. $ 100
2000.................................................. 629
2001.................................................. 626
2002.................................................. 568
2003.................................................. 511
Thereafter............................................ 2,173
------
Total minimum lease payments.......................... $4,607
======
</TABLE>
Rent expense for the years ended December 31, 1996, 1997 and 1998 and for
the nine months ended September 30, 1998 and 1999 amounted to $109, $109, $165,
$86 and $73, respectively.
During 1999, in connection with one of the Company's office leases, the
Company was required to provide a $400 security deposit.
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.
OTHER AGREEMENTS:
The Company has agreements with wireless network operators who act as
resellers of III'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.
III 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-17
<PAGE> 108
INTELLIGENT INFORMATION INCORPORATED
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. IIP, a wholly owned subsidiary of Skytel, was a
holder of common and Series A preferred shares of the Company. In February 1999,
IIP'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 III.
NOTES PAYABLE TO RELATED PARTIES:
The Company had outstanding borrowings totaling $117 and $144 as of
December 31, 1997 and 1998, respectively, 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:
The Company had an outstanding note receivable from the Chairman of the
Board of Directors totaling $100 as of September 30, 1999. The note accrues
interest at the rate of 10% per annum.
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.
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
F-18
<PAGE> 109
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
gross revenues on a monthly basis, but in no event less than $3 per month, with
a 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 $11, $39, $32, $23 and $33 for the years ended December 31, 1996,
1997 and 1998 and for the nine months ended September 30, 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 $37 at December 31, 1998 and September 30, 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 $12, $15, $29,
$20 and $26 for the years ended December 31, 1996, 1997 and 1998 and for the
nine months ended September 30, 1998 and 1999, respectively.
NOTE 10 -- PREFERRED STOCK:
Preferred stock consisted of the following at December 31, 1997 and 1998
and September 30, 1999:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- SEPTEMBER 30,
1997 1998 1999
------ ------ -------------
<S> <C> <C> <C>
MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK:
Series B.......................... $1,412 $1,436 $ 1,454
Series D.......................... - 1,064 1,229
Series E.......................... - - 16,451
Subscriptions receivable on Series
E preferred stock.............. - - (3,000)
------ ------ -------
Total mandatorily
redeemable convertible
preferred stock........ $1,412 $2,500 $16,134
====== ====== =======
CONVERTIBLE PREFERRED STOCK AT PAR
VALUE:
Series A.......................... $ - $ - $ -
Series C.......................... - - -
------ ------ -------
$ - $ - $ -
====== ====== =======
</TABLE>
F-19
<PAGE> 110
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
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. Upon the issuance, 40% of the
Company's common stock was owned by IIP, 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
IIP. The aggregate 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 IIP. 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
redemption of the preferred stock resulted in $4,230 recorded as treasury stock
and a $3,665 charge to accumulated deficit that is included in "loss applicable
to common stock".
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. 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 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.
F-20
<PAGE> 111
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
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.
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).
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 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. The investor contracted to purchase an
additional 1,928.64 shares of Series E mandatorily redeemable convertible
preferred stock at $1,555.50 per share on the first anniversary date or, at the
investor's discretion, prior thereto, for $3,000. See related subsequent event
disclosure in Note 13.
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 Series B, Series D
and Series E mandatorily redeemable 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 5,131,280 shares of common stock is reflected in
the unaudited pro forma consolidated balance sheet at September 30, 1999. See
related unaudited subsequent event disclosure in Note 14.
F-21
<PAGE> 112
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
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 preferred
stock and Series E 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 and Series E mandatorily redeemable preferred stock
accrue dividends cumulatively at a rate of 10% per share per annum. This
cumulative dividend is being recorded by a charge to accumulated deficit and an
increase to the carrying values of the Series D and Series E preferred shares.
The state in which the Company is incorporated does not preclude companies from
accruing when a stockholders' deficit exists. 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 III is equal to or greater than $152,000,000. In the
event of liquidation of the Company, 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.
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 preferred stock and Series E 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
and $1,555.50 per share, respectively.
F-22
<PAGE> 113
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
The total preferred shares authorized was 10,000 at December 31, 1997 and
1998 and 20,000 at September 30, 1999. The Company's preferred stock issued and
outstanding consisted of the following shares at December 31, 1997 and 1998 and
September 30, 1999:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
-------------- -------------
1997 1998 1999
----- ----- -------------
<S> <C> <C> <C>
MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK:
Series B, $.01 par value
Shares issued and outstanding.... 1,705 1,705 1,705
Series D, $.01 par value
Shares issued and outstanding.... - 843 843
Series E, $.01 par value
Shares issued and outstanding.... - - 7,714.56
CONVERTIBLE PREFERRED STOCK:
Series A, $.01 par value
Shares issued and outstanding.... 3,770 3,770 -
Series C, $.01 par value
Shares issued and outstanding.... 864 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, SEPTEMBER 30,
-------------------- -------------
1997 1998 1999
------- --------- -------------
<S> <C> <C> <C>
Debt financings................. 201,500 547,484 747,484
Series B preferred stock........ 234,465 234,465 234,465
Series C preferred stock........ 74,910 74,910 74,910
Services related to 1998 capital
raising....................... - 350,000 350,000
Series A preferred stock
redemption.................... - - 500,000
------- --------- ---------
510,875 1,206,859 1,906,859
======= ========= =========
Weighted Average exercise price
per share..................... $2.75 $3.10 $3.12
</TABLE>
F-23
<PAGE> 114
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
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
recorded as additional paid-in capital and as a discount to the debt. See Note
14 for related unaudited subsequent event disclosure.
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 and 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 extension of the expiration dates 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
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.
F-24
<PAGE> 115
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
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.
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 IIP, as part of the
redemption price for its Series A preferred and common stock (Note 10). This
warrant allows IIP 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.
COMMON STOCK RESERVED:
The Company has reserved shares of common stock as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
---------------------- -------------
1997 1998 1999
--------- --------- -------------
<S> <C> <C> <C>
Conversion of preferred
stock....................... 3,169,500 4,256,000 6,228,280
Stock options................. 229,100 387,205 591,985
Stock warrants................ 510,875 1,206,859 1,906,859
--------- --------- ---------
3,909,475 5,850,064 8,727,124
========= ========= =========
</TABLE>
F-25
<PAGE> 116
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
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 OPTION PLAN:
The III stock option 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
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
NUMBER OF EXERCISE PRICE
OPTIONS PER SHARE
--------- ----------------
<S> <C> <C>
Outstanding at January 1, 1996........... 155,000 $0.30
Canceled................................. (35,500) $0.30
-------
Outstanding at January 1, 1997......... 119,500 $0.30
Granted................................ 130,000 $1.76
Canceled............................... (20,400) $1.16
-------
Outstanding at December 31, 1997....... 229,100 $1.05
Granted................................ 162,555 $2.37
Canceled............................... (4,450) $2.37
-------
Outstanding at December 31, 1998....... 387,205 $1.59
Granted................................ 214,000 $2.74
Canceled............................... (9,220) $2.37
-------
Outstanding at September 30, 1999...... 591,985 $1.99
=======
</TABLE>
F-26
<PAGE> 117
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
The following summarizes the outstanding and exercisable options under the
Plan as of September 30, 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>
$0.30 111,100 1.0 $0.30 65,820 $0.30
$1.76 - $2.37 417,885 3.1 $2.20 78,477 $2.00
$3.11 - $4.00 63,000 3.4 $3.62 - -
------- -------
591,985 144,297
======= =======
</TABLE>
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, SEPTEMBER 30,
--------------------------- -------------
1996 1997 1998 1999
------- ------- ------- -------------
<S> <C> <C> <C> <C>
Loss applicable to common
stock:
As reported................ $(1,327) $(2,524) $(3,169) $(9,527)
Pro forma under FAS 123.... (1,364) (2,566) (3,231) (9,609)
Basic and diluted net loss
per share:
As reported................ ($ 0.18) ($ 0.33) ($ 0.42) ($ 1.60)
Pro forma under FAS 123.... ($ 0.18) ($ 0.34) ($ 0.43) ($ 1.61)
</TABLE>
The estimated fair value at date of grant for options granted for the nine
months ended September 30, 1999 ranged from $.58 to $2.42. The option value is
estimated on the date of grant using the Black-Scholes option-pricing model with
the following weighted average assumptions:
<TABLE>
<S> <C>
Risk free interest rate............................. 5.8%
Expected dividend yield............................. 0
Expected life of option (years)..................... 4.83
Expected volatility................................. 0.0001%
</TABLE>
F-27
<PAGE> 118
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
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 $76 was recorded for the nine months ended
September 30, 1999. This represents compensation expense that will be recognized
over the remaining vesting period. Compensation expense of $3 was recorded for
the nine months ended September 30, 1999. No compensation expense has been
recognized for stock-based compensation plans for the years ended December 31,
1998, 1997 and 1996. The weighted average fair value of options granted during
1997, 1998 and the nine months ended September 30, 1999 is estimated as $.046,
$0.55 and $1.00, respectively.
NOTE 13 - SUBSEQUENT EVENTS:
NOTES RECEIVABLE - RELATED PARTIES:
In October 1999, the Company's note receivable from related parties of $100
was repaid in full.
STOCK OPTION ISSUANCES:
On October 19, 1999, the Company granted 52,000 stock options to employees
at an exercise price of $4.00 per share. The estimated fair value of the options
at that date resulted in deferred compensation of $118. The compensation expense
will be recognized over the option vesting period of four years. The total
compensation expense to be recognized in the fourth quarter of 1999 is $29.
On November 11, 1999, the Company granted 274,500 stock options to
employees at an exercise price of $4.00 per share. The estimated fair value of
the options at that date resulted in deferred compensation of $824. The
compensation expense will be recognized over the option vesting period of four
years. The total compensation expense to be recognized in the fourth quarter of
1999 is $206.
PREFERRED STOCK INVESTMENT:
On November 23, 1999, as discussed in Note 10, a 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. The Company's management is in the process of
determining the value of the beneficial conversion feature related to the
1,928.64 shares of Series E preferred stock purchased.
F-28
<PAGE> 119
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
LEASE AGREEMENT:
In November 1999, the Company entered into a lease agreement with a third
party lessor for a facility in Hurst, Texas. The annual rent expense will be
$110. The lease term will commerce on February 1, 2000 and will expire on
January 31, 2010.
COMMITMENTS:
Through December 10, 1999, the Company had entered into contracts
committing the Company to $2,690 worth of expenditures for construction,
furniture and equipment related to their new operations center and headquarters
in Stamford, Connecticut.
NOTE 14 -- SUBSEQUENT EVENTS (UNAUDITED):
SERIES F PREFERRED STOCK ISSUANCES:
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 for approximately $32,667 to private investor groups. Each share of Series
F preferred stock is convertible into 500 shares of the Company's common stock,
at the option of the holder, at any time, and is mandatorily convertible upon
the closing of a qualified public offering of the Company's common stock. The
Company is in the process of assessing the value of the beneficial conversion
feature related to the Series F preferred stock, if any. The conversion ratio is
adjusted in the event of future dilution, and the Series F preferred shares have
full voting rights.
The $32,667 of proceeds includes $24,850 of cash investments, including
$3,000 from a related party stockholder of the Company, $5,000 from the
conversion of an outstanding note payable, $317 from the conversion of a five-
year convertible note payable and $2,500 in television advertising rights from
National Broadcasting Company, Inc.
Subsequent to December 31, 2003, but not later than June 30, 2004, the
holders of the Series F preferred stock have the option to sell, and the Company
is required to buy, all the Series F preferred shares owned by the investor
groups at the greater of a 20% annual internal rate of return on the investment
or the private investor groups' pro rata share of the Company's market value
based on the findings of a mutually agreed upon appraiser as specified in the
put option agreement. The total number of Series F shares authorized is 8,248.33
with a par value of $.01.
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. After payment of this amount to the holders of the
Series F preferred shares and payment to the other preferred stockholders of the
Company
F-29
<PAGE> 120
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
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. Dividends are payable when and if declared by the Company's board of
directors at a rate of 10% and are included within the 20% internal rate of
return guaranteed upon redemption. Any accrued but unpaid dividends will be
forgiven should the Company be sold or complete a qualified public offering.
On December 22, 1999, the Company entered into an agreement with the
Connecticut Development Association ("CDA") to exchange its five-year
convertible note payable to CDA for 79.96 shares of Series F preferred stock at
a conversion price of $3,960.40 per share and to exercise its warrant to
purchase 101,500 shares of common stock at a price of $1.72 per share. This
conversion may result in an extraordinary loss on redemption that would be
measured by the excess of the value of the preferred stock over the carrying
amount of the debt at the extinguishment date. In addition, CDA paid $500 in
cash for an additional 126.25 shares of the Series F mandatorily redeemable
preferred stock as of December 22, 1999.
On December 29, 1999, the Company entered into an agreement with MCI
WorldCom, Inc., parent company to SkyTel Communications, Inc. ("Skytel"), to
convert SkyTel's five-year $5,000 note payable into 1,262.5 shares of Series F
preferred stock at a conversion price of $3,960.40 per share. This conversion
may result in an extraordinary loss on redemption.
On December 24, 1999 the Company entered an agreement with National
Broadcasting Company, Inc. ("NBC"). In the agreement NBC is to provide $2,500
worth of 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. This advertising can be 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 will account for these services at fair value. In
addition, NBC Interactive Media, Inc. purchased 631.25 shares of Series F
mandatorily redeemable preferred stock for $2,500 in cash.
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 will pay $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 will have an
exercise price of $7.92 per share and will have a five year life.
F-30
<PAGE> 121
INTELLIGENT INFORMATION INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
OTHER
On December 22, 1999, the Company made two amendments to its certificate of
incorporation. The first amendment increases the Company's authorized common
stock from 25,000,000 shares to 50,000,000 shares and increases the Company's
authorized preferred stock from 25,000 shares to 50,000 shares. The second
amendment provides for the mandatory conversion of the Series C preferred stock
into common stock upon a qualified initial public offering. These amendments
were approved by the Board of Directors and the stockholders, including, in the
case of the second amendment, a majority of the Series C stockholders.
On December 29, 1999, the Company entered into a two-year agreement with
NBC Interactive Media, Inc. This agreement provides NBC Interactive Media, Inc.
with contingent warrants to purchase shares of the Company's common stock at an
exercise price of $10.00 per share. These warrants are issued and become
exercisable upon the execution of agreements allowing the Company to distribute
content from NBC Interactive Media, Inc. or its affiliates. NBC Interactive
Media, Inc. will receive warrants to purchase 20,000 common shares for each
content distribution agreement it or any of its affiliates enters into with the
Company, or 30,000 shares for such an 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.
On January 4, 2000 the Company amended its certificate of incorporation to
change its name from Intelligent Information Incorporated to i3 Mobile, Inc.
F-31
<PAGE> 122
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..................... 3
Risk Factors........................... 9
Forward Looking Statements............. 24
Use of Proceeds........................ 25
Dividend Policy........................ 25
Capitalization......................... 26
Dilution............................... 28
Selected Consolidated Financial Data... 29
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 30
Our Business........................... 40
Management............................. 65
Certain Relationships and Related
Transactions......................... 75
Principal Stockholders................. 78
Description Of Capital Stock........... 80
Shares Eligible for Future Sale........ 84
Underwriting........................... 86
Experts................................ 88
Legal Matters.......................... 89
Where You Can Find Additional
Information.......................... 89
Reports to Stockholders................ 89
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.
[INTELLIGENT INFORMATION LOGO]
i3 MOBILE, INC.
SHARES
COMMON STOCK
DEUTSCHE BANC ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
PROSPECTUS
, 2000
<PAGE> 123
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid by i3 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......... $17,160
NASD filing fee............................................. 7,000
Nasdaq National Market listing fee.......................... 1,000
Printing and engraving expenses............................. *
Accounting fees and expenses................................ *
Legal fees and expenses..................................... *
Blue Sky fees and expenses.................................. 2,500
Transfer Agent and Registrar fees and expenses.............. *
Miscellaneous expenses...................................... *
-------
Total:................................................. $ *
=======
</TABLE>
- -------------------------
* To be filed by amendment.
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 (filed as Exhibit 3.1 to this
registration statement) eliminates its directors' personal liability to i3 or
its stockholders for monetary damages for a breach of fiduciary duty as a
director of i3, except:
- for any breach of the director's duty of loyalty to i3 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 and its stockholders may be unable to obtain
monetary damages from a director for certain breaches of his or her fiduciary
duty to i3. 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
II-1
<PAGE> 124
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.
The Amended Bylaws of i3 (filed as Exhibit 3.2 to this registration
statement) provide that i3 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'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 and its
officers and directors for certain liabilities arising under the Securities Act
of 1933, as amended, or otherwise.
The indemnification provision in i3's Restated Certificate of
Incorporation, Amended Bylaws and the Underwriting Agreement may be sufficiently
broad to permit indemnification of i3's directors and executive officers for
liabilities arising under the Securities Act of 1933, as amended.
i3 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> 125
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following securities were issued by i3 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 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. in
consideration of an aggregate 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. This warrant was exercisable at any time until December
31, 1998 at an exercise price of $3.00 per share. In April 1998, i3 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 $250,000 in cash in February 1998. All of these preferred shares will be
converted to common stock upon the completion of this offering.
(b) On December 30, 1996, i3 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 June 31, 1997 and October 16, 1998, twenty-one investors
purchased an aggregate of 2,194 shares of Series C Convertible Preferred Stock
for an aggregate consideration of $2,458,000. All of these shares will be
converted to common stock upon the completion of this offering. Additionally, i3
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 extended the expiration date of these warrants to December 31, 2001.
(d) On December 17, 1997, i3 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 extended the
expiration date of these warrants to December 31, 2001.
(e) On June 23, 1998, i3 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.
II-3
<PAGE> 126
(f) Pursuant to a Stock Purchase Agreement dated as of August 11, 1998, i3
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 an aggregate
purchase price of $1,001,000 in cash and converted notes payable. All of these
shares will be converted to common stock upon the completion of this offering.
As part of the issuance of the notes payable, i3 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 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 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 was converted into Series F mandarorily redeemable preferred stock in
December 1999.
(i) Pursuant to a Stock Purchase Agreement dated February 1, 1999, i3 sold
a total of 9,643.2 shares of Series E Convertible Preferred Stock to BG Media
Investors L.P. for 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.
(j) On March 8, 1999, i3 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 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.
II-4
<PAGE> 127
(k) Pursuant to a Stock Purchase Agreement dated as of December 22, 1999,
i3 sold an aggregate of 8,248.33 shares of Series F Convertible Preferred Stock
for aggregate consideration 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 $2,500,000 in
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
affiliate of MCI WorldCom, Inc. All of these shares will be converted to common
stock upon the completion of the initial public offering.
(l) As of the date of this prospectus, i3 had granted options to employees
under the 1995 Stock Option Plan to purchase an aggregate of 918,485 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.
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 for the
participation of its employees, directors, officers, consultants and advisors.
No underwriters were employed in any of the above transactions.
II-5
<PAGE> 128
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1 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 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on December 29, 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 Bylaws of i3 adopted on July 30, 1998, as further
amended as of September 8, 1999.
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 and Stephen G.
Maloney dated as of January 1, 1999 as amended September 9,
1999.
10.2 Employment Agreement by and between i3 and Robert M. Unnold
dated January 1, 1999, as amended September 9, 1999.
10.3 Employment and Royalty Agreement by and between i3 and
Jeffrey N. Klein dated October 27, 1998.
10.4 Agreement of Lease by and between i3 and Seaboard Property
Management, Inc. dated April 27, 1995, as amended.
10.4a Lease Modification Agreement between i3 and Seaboard
Property Management, Inc. dated February 1997.
10.5 Ridgewood Square Office Park Commercial Lease by and between
i3 and Ridgewood Square Ltd. dated February 7, 1997.
10.6 Agreement of Sublease by and between i3 and National
Westminster Bank, PLC, dated as of September 9, 1999.
10.7 Lease Agreement by and between i3 and Double Creek Capital
Corporation dated November 30, 1999.
10.8 Stock Purchase Agreement by and between i3 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.
</TABLE>
II-6
<PAGE> 129
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.9 Master Service Agreement by and between i3 and AT&T Wireless
Services, Inc. dated November 3, 1998.**
10.10 Preferred Content License Agreement by and between i3 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 and Bell Mobility
Cellular Inc. dated May 12, 1998.**
10.12 Service Reseller Agreement by and between i3 and Omnipoint
Communications Services dated November 8, 1996, as amended
July 10, 1998.**
10.12a Amendment to Service Reseller Agreement by and between i3
and Omnipoint Communications Services dated July 10, 1998.**
10.13 Services Agreement by and between i3 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 and
Southwestern Bell Mobile Systems Inc. and Southwestern Bell
Wireless Inc. dated January 11, 1999.**
10.14 Service Agreement by and between i3 and AirTouch Cellular
dated April 30, 1999.**
10.15 Service Agreement by and between i3 and The Weather Channel
Enterprises, Inc. dated December 21, 1998.**
10.16 Letter Agreement by and between i3 and National Broadcasting
Company, Inc. dated December 24, 1999.
10.17 Letter Agreement by and between i3 and NBC Interactive
Media, Inc. dated December 29, 1999.
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 (included on the signature page).
27.1 Financial Data Schedule.
</TABLE>
- -------------------------
* To be filed by amendment.
** Confidential treatment has been requested for certain portions of this
Exhibit pursuant to Rule 406 promulgated under the Securities Act.
Confidential portions of this Exhibit have been filed separately with the
Securities and Exchange Commission.
II-7
<PAGE> 130
(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-8
<PAGE> 131
SCHEDULE I
REPORT OF PRICEWATERHOUSECOOPERS LLP ON FINANCIAL STATEMENT SCHEDULE
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
To the Board of Directors and Stockholders
of Intelligent Information Incorporated
Our audits of the consolidated financial statements referred to in our report
dated December 10, 1999 appearing on page F-2 in this Registration Statement on
Form S-1 of Intelligent Information Incorporated 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
December 10, 1999
II-9
<PAGE> 132
SCHEDULE II
I3 MOBILE, INC.
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<S> <C>
Allowance for doubtful accounts:
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............................................... (24,000)
--------
Balance, September 30, 1999................................. $217,000
========
</TABLE>
II-10
<PAGE> 133
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-11
<PAGE> 134
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 January 7, 2000.
i3 MOBILE, INC.
By: /s/ STEPHEN G. MALONEY
------------------------------------
Stephen G. Maloney
President and Chief Executive
Officer
Each person whose signature appears below hereby constitutes and appoints
Stephen G. Maloney his true and lawful attorney-in-fact and agent, with full
power and substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
registration statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying all that said attorney-in-fact and agent or his substitute or
substitutes, or any of them, may lawfully do or cause to be done by virtue
hereof.
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 and January 7, 2000
- ---------------------------------- Director
Stephen G. Maloney (Principal Executive Officer)
/s/ ROBERT COLETTI Controller January 7, 2000
- ---------------------------------- (Principal Financial and Accounting
Robert Coletti Officer)
/s/ ROBERT M. UNNOLD Chairman of the Board and Director January 7, 2000
- ----------------------------------
Robert M. Unnold
/s/ KERRY J. DALE Director January 7, 2000
- ----------------------------------
Kerry J. Dale
/s/ JAMES A. JOHNSON Director January 7, 2000
- ----------------------------------
James A. Johnson
/s/ J. WILLIAM GRIMES Director January 7, 2000
- ----------------------------------
J. William Grimes
</TABLE>
II-12
<PAGE> 135
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DONALD F. CHRISTINO Director January 7, 2000
- ----------------------------------
Donald F. Christino
/s/ W. PETER DANIELS Director January 7, 2000
- ----------------------------------
W. Peter Daniels
</TABLE>
II-13
<PAGE> 136
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- ----------- ------------
<C> <S> <C>
1.1 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 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on December 29, 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 Bylaws of i3 adopted on July 30, 1998, as further
amended as of September 8, 1999.............................
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 and Stephen G.
Maloney dated as of January 1, 1999 as amended September 9,
1999........................................................
10.2 Employment Agreement by and between i3 and Robert M. Unnold
dated January 1, 1999, as amended September 9, 1999.........
10.3 Employment and Royalty Agreement by and between i3 and
Jeffrey N. Klein dated October 27, 1998.....................
10.4 Agreement of Lease by and between i3 and Seaboard Property
Management, Inc. dated April 27, 1995, as amended...........
10.4a Lease Modification Agreement between i3 and Seaboard
Property Management, Inc. dated February 1997...............
</TABLE>
<PAGE> 137
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- ----------- ------------
<C> <S> <C>
10.5 Ridgewood Square Office Park Commercial Lease by and between
i3 and Ridgewood Square Ltd. dated February 7, 1997.........
10.6 Agreement of Sublease by and between i3 and National
Westminster Bank, PLC, dated as of September 9, 1999........
10.7 Lease Agreement by and between i3 and Double Creek Capital
Corporation dated November 30, 1999.........................
10.8 Stock Purchase Agreement by and between i3 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 and AT&T Wireless
Services, Inc. dated November 3, 1998**.....................
10.10 Preferred Content License Agreement by and between i3 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 and Bell Mobility
Cellular Inc. dated May 12, 1998**..........................
10.12 Service Reseller Agreement by and between i3 and Omnipoint
Communications Services dated November 8, 1996, as amended
July 10, 1998**.............................................
10.12a Amendment to Service Reseller Agreement by and between i3
and Omnipoint Communications Services dated July 10,
1998**......................................................
10.13 Services Agreement by and between i3 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 and
Southwestern Bell Mobile Systems Inc. and Southwestern Bell
Wireless Inc. dated January 11, 1999**......................
10.14 Service Agreement by and between i3 and AirTouch Cellular
dated April 30, 1999**......................................
10.15 Service Agreement by and between i3 and The Weather Channel
Enterprises, Inc. dated December 21, 1998**.................
10.16 Letter Agreement by and between i3 and National Broadcasting
Company, Inc. dated December 24, 1999.
10.17 Letter Agreement by and between i3 and NBC Interactive
Media, Inc. dated December 29, 1999.
21.1 Subsidiaries of the Registrant..............................
23.1 Consent of PricewaterhouseCoopers LLP.......................
23.2 Consent of Counsel (included in Exhibit 5.1)*...............
</TABLE>
<PAGE> 138
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- ----------- ------------
<C> <S> <C>
24.1 Power of Attorney (included on the signature page)..........
27.1 Financial Data Schedule.....................................
</TABLE>
- -------------
* To be filed by amendment.
** Confidential treatment has been requested for certain portions of this
Exhibit pursuant to Rule 406 promulgated under the Securities Act.
Confidential portions of this Exhibit have been filed separately with the
Securities and Exchange Commission.
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
INTELLIGENT INFORMATION INCORPORATED
------------------------------------------------------------------------------
INTELLIGENT INFORMATION INCORPORATED, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"DGCL"), DOES HEREBY CERTIFY:
1. The name of the corporation is INTELLIGENT INFORMATION INCORPORATED
(the "Corporation").
2. The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on June 28, 1991.
3. The Restated Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on January 20, 1995.
4. The Certificate of Designations, Powers, Preferences and Rights of
Series A Convertible Preferred Stock of the Corporation was filed with the
Secretary of State of the State of Delaware on August 13, 1996.
5. The Certificate of Designations, Powers, Preferences and Rights of
Series B Convertible Preferred Stock of the Corporation was filed with the
Secretary of State of the State of Delaware on August 30, 1996.
6. The Certificate of Amendment to the Restated Certificate of
Incorporation was filed with the Secretary of State of the State of Delaware on
June 11, 1997.
7. The Certificate of Amendment to Certificate of Designations, Powers,
Preferences and Rights of Series B Convertible Preferred Stock of the
Corporation was filed with the Secretary of State of the State of Delaware on
January 27, 1998.
8. The Certificate of Designations, Powers, Preferences and Rights of
Series C Convertible Preferred Stock of the Corporation was filed with the
Secretary of State of the State of Delaware on January 27, 1998.
- 1 -
<PAGE> 2
9. The Amended Certificate of Designations, Powers, Preferences and
Rights of Series C Convertible Preferred Stock of the Corporation was filed with
the Secretary of State of the State of Delaware on August 7, 1998.
10. The Certificate of Designations, Powers, Preferences and Rights of
Series D Convertible Preferred Stock of the Corporation was filed with the
Secretary of State of the State of Delaware on August 7, 1998.
11. The Certificate of Amendment to Restated Certificate of
Incorporation of the Corporation was filed with the Secretary of State of the
State of Delaware on February 11, 1999.
12. The Certificate of Designations, Powers, Preferences and Rights of
Series E Convertible Preferred Stock of the Corporation was filed with the
Secretary of State of the State of Delaware on February 11, 1999.
13. The Amendment to Certificate of Designations, Powers, Preferences
and Rights of Series B Convertible Preferred Stock of the Corporation was filed
with the Secretary of State of the State of Delaware on February 11, 1999.
14. The Amendment to Certificate of Designations, Powers, Preferences
and Rights of Series C Convertible Preferred Stock of the Corporation was filed
with the Secretary of State of the State of Delaware on February 11, 1999.
15. The Amendment to Certificate of Designations, Powers, Preferences
and Rights of Series D Convertible Preferred Stock of the Corporation was filed
with the Secretary of State of the State of Delaware on February 11, 1999.
16. Pursuant to Sections 242 and 245 of the DGCL, this Restated
Certificate of Incorporation of the Corporation restates in its entirety the
Certificate of Incorporation, as in effect, as follows:
FIRST. NAME. The name of the corporation is INTELLIGENT INFORMATION
INCORPORATED.
SECOND. ADDRESS; REGISTERED AGENT. The address of the registered office of
the Corporation in the State of Delaware is 1013 Centre Road, City of
Wilmington, County of New Castle, State of Delaware 19805, and its registered
agent at such address is The Prentice-Hall Corporation System, Inc.
THIRD. NATURE OF BUSINESS; PURPOSES. The nature of the business and
purposes to be conducted or promoted by the Corporation are to engage in, carry
on and conduct any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
- 2 -
<PAGE> 3
FOURTH. NUMBER OF SHARES. The total number of shares of stock which the
Corporation shall have authority to issue is 25,000,000 shares of Common Stock,
par value $.01 per share ("Common Stock"), and 20,000 shares of Preferred Stock,
par value $.01 per share (the "Preferred Stock").
A statement of the designations and the powers, preferences and rights of
such classes of stock and the qualifications, limitations or restrictions
thereof, the fixing of which by the Certificate of Incorporation it desired, and
the authority of the Board of Directors to fix, by resolution or resolutions,
the designations and the powers, preferences and rights of such classes of stock
or the qualifications, limitations or restrictions thereof, which are not fixed
hereby, are as follows:
PART I. PROVISIONS APPLICABLE TO ALL SERIES OF PREFERRED STOCK.
(a) Shares of Preferred Stock may be issued from time to time in one or
more series. The preferences and relative participating, optional and other
special rights of each series and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other series
already outstanding; the terms of each series shall be as specified in Part II
of this Article FOURTH and in the resolution or resolutions hereinafter referred
to; and the Board of Directors of the Corporation is hereby expressly granted
authority to fix, by resolution or resolutions adopted prior to the issuance of
any shares of a particular series of Preferred Stock, the designations,
preferences and relative participating, optional and other special rights, or
the qualifications, limitations or restrictions thereof, of such series,
including, but without limiting the generality of the foregoing, the following:
(i) The rate and times at which, and the terms and conditions on
which, dividends on the Preferred Stock of such series shall be paid;
(ii) The right, if any, of holders of Preferred Stock of such series
to convert the same into, or exchange the same for, other classes of stock
of the Corporation and the terms and conditions of such conversion or
exchange;
(iii) The redemption price or prices and the time at which, and the
terms and conditions on which, Preferred Stock of such series may be
redeemed;
(iv) The rights of the holders of Preferred Stock of such series
upon the voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding up of the Corporation;
(v) The voting power, if any, of the Preferred Stock of such series;
and
(vi) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of such series.
(b) All shares of each series shall be identical in all respects to the
other shares in such series. The rights of the Common Stock of the Corporation
shall be subject to the
- 3 -
<PAGE> 4
preferences and relative participating, optional and other special rights of the
Preferred Stock of each series as fixed herein and from time to time by the
Board of Directors as aforesaid.
PART II. PROVISIONS APPLICABLE TO SPECIFIC SERIES OF PREFERRED STOCK. The
Preferred Stock shall have the following designations, powers, preferences and
rights:
A. SERIES B CONVERTIBLE PREFERRED STOCK
1. Designation; Number of Shares. The designation of this Series
of Preferred Stock shall be "Series B Convertible Preferred Stock," par value
$.01 per share (the "Series B Preferred Stock"). The total number of shares of
Series B Preferred Stock that may be issued shall be 1,705 shares. The Series B
Preferred Stock shall have an initial stated value of $879.66 per share (the
"Series B Stated Value"). In the event of any stock split, stock dividend,
combination or other recapitalization transaction by which the Corporation
increases or decreases its outstanding Series B Preferred Stock, the Series B
Stated Value per share of Series B Preferred Stock shall be adjusted to reflect
such recapitalization.
2. Voting Rights.
(a) Except to the extent provided in Section 2(b) below and
as expressly provided by the DGCL, the holders of Series B Preferred Stock shall
not be entitled to vote on any matter as to which the holders of the Common
Stock are entitled to vote. Holders of Series B Preferred Stock, however, shall
be entitled to receive notice of every meeting of the stockholders of the
Corporation.
(b) The holders of Series B Preferred Stock shall be
entitled to vote as a class upon the following matters, which matters shall
require the approval of the holders of a majority of the outstanding shares of
Series B Preferred Stock:
(i) the merger, consolidation, division, mandatory
share exchange, recapitalization or liquidation of all or substantially all of
the assets of the Corporation;
(ii) the sale of assets of the Corporation valued at
more than $100,000;
(iii) the amendment of the By-laws or Certificate of
Incorporation of the Corporation;
(iv) the redemption or repurchase by the Corporation of
any securities issued by the Corporation;
(v) a change in powers, preferences or rights of any
class or series of securities of the Corporation that could adversely affect the
Series B Preferred Stock; and
(vi) a distribution on the Corporation's Common Stock
in shares of its capital stock other than Common Stock.
3. [Intentionally Omitted.]
- 4 -
<PAGE> 5
4. Conversion Rights of Series B Preferred Stock.
(a) Optional Conversion.
(i) A holder of record of any share or shares of
Series B Preferred Stock shall have the right, at any time, at such holder's
option, to convert, without the payment of any additional consideration, each
share of Series B Preferred Stock held by such holder into that number of fully
paid and non-assessable shares of Common Stock as is determined by multiplying 1
by the Series B Conversion Factor (as defined below).
(ii) Upon the optional conversion of any shares of
Series B Preferred Stock, such shares of Series B Preferred Stock shall resume
the status of authorized and unissued shares of the Preferred Stock, par value
$0.01 per share, of the Corporation, without designation as to series until such
shares are once more designated as part of a particular series by the Board of
Directors.
(iii) If a holder of shares of Series B Preferred Stock
desires to exercise the optional conversion right pursuant to this subsection
4(a), such holder shall give written notice to the Corporation of such holder's
election to convert a stated number of shares of Series B Preferred Stock into
shares of Common Stock, at the conversion rate then in effect, which notice
shall be accompanied by the certificate or certificates representing such shares
of Series B Preferred Stock that shall be converted into Common Stock. The
notice shall also contain a statement of the name or names in which the
certificate or certificates for Common Stock shall be issued. If such
certificate or certificates are to be issued to any person or persons other than
the registered holder or holders of such certificate or certificates, or if such
certificate or certificates are registered in the name or names of any person or
persons other than the person or persons signing the notice, the signatures on
the notice must be guaranteed by a participant in the Security Transfer Agents
Medallion Program or the New York Stock Exchange Medallion Signature Guarantee
Program. Promptly after receiving the aforesaid notice and certificate or
certificates representing the Series B Preferred Stock surrendered for
conversion, the Corporation shall issue and deliver to such holder of Series B
Preferred Stock, or to such holder's nominee or nominees, a certificate or
certificates for the number of shares of Common Stock issuable upon conversion
of such Series B Preferred Stock, and the certificates representing shares of
Series B Preferred Stock surrendered for conversion shall be canceled by the
Corporation. If the number of shares represented by the certificate or
certificates surrendered for conversion shall exceed the number of shares to be
converted, the Corporation shall issue and deliver to the person entitled
thereto a certificate representing the balance of any unconverted shares.
(b) Mandatory Conversion.
(i) Upon the first closing of a Qualified Public
Offering (as hereinafter defined) of the Common Stock of the Corporation or a
Qualified Sale of the Corporation (as hereinafter defined), each share of Series
B Preferred Stock held by such holder shall immediately be converted into that
number of fully paid and non-assessable shares of Common Stock as is determined
by multiplying 1 by the Series B Conversion Factor (as defined below).
- 5 -
<PAGE> 6
(ii) A "Qualified Public Offering" is hereby defined as
a public offering in which the aggregate proceeds (net of any underwriter's
discount) to the Corporation exceed $10,000,000 under which the shares of Common
Stock into which each share of Series B Preferred Stock is to be converted
(after all adjustments in accordance with this Section 4 have been made) are
valued in the aggregate in excess of $l,759.32 and pursuant to which the Common
Stock is listed on a national stock exchange or included for quotation on the
Nasdaq National Market of the Nasdaq Stock Market, Inc.
(iii) A "Qualified Sale" is hereby defined as a merger,
consolidation, division, mandatory share exchange, sale of stock or other
transaction resulting in the stockholders of the Corporation prior to the
transaction owning less than 50% of the voting stock of the Corporation
immediately after the transaction, in which transaction the shares of the
Corporation into which each share of Series B Preferred Stock is to be converted
(after all adjustments in accordance with this Section 4 have been made) are
valued in the aggregate in excess of $l,759.32. A "Qualified Sale" and a
"Qualified Public Offering" sometimes shall be referred to herein collectively
as a "Qualifying Event").
(iv) The Corporation shall give each holder notice of
the occurrence of a Qualifying Event within a reasonable time of the initial
filing of a registration statement with respect to a Qualified Public Offering,
or within a reasonable time after the execution of a definitive agreement with
respect to a Qualified Sale, as the case may be. At any time at or after the
closing of the Qualifying Event, the Corporation shall deliver to each holder of
Series B Preferred Stock such number of shares of Common Stock into which such
holder's shares are then convertible upon surrender by such holder of
certificates representing the shares of Series B Preferred Stock held by such
holder or presentation of an affidavit of loss certificate together with an
indemnity satisfactory to the Corporation.
(c) Series B Conversion Factor. The initial conversion
factor shall be 1, subject to adjustment in accordance with the provisions of
this Section 4(c). The conversion factor in effect from time to time, as
adjusted pursuant to this Section 4(c), is referred to herein as the "Series B
Conversion Factor."
(i) Each adjustment to the Series B Conversion Factor
shall be calculated to the nearest four decimal places.
(ii) In the event that: (A) the Corporation shall, at
any time, pay a dividend in, or make a distribution on its Common Stock or any
other equity securities (other than Series B Preferred Stock) in, shares of
Common Stock; (B) the Corporation shall, at any time, by subdivision of its
shares of outstanding Common Stock, by reclassification, stock split or
otherwise, subdivide its outstanding shares of Common Stock into a greater
number of shares; (C) the Corporation shall, at any time, combine its
outstanding shares of Common Stock into a lesser number of shares, by
reclassification, reverse stock split, or otherwise (for purposes of this
Section 4(c)(ii), the events described in (A), (B) and (C) above shall be
referred to as "Capital Transactions"); then the Series B Conversion Factor then
in effect shall be adjusted to a number determined by multiplying the Series B
Conversion Factor in effect immediately prior to such Capital Transaction by the
following fraction:
- 6 -
<PAGE> 7
X
---
Y
wherein:
X = the number of shares of Common Stock outstanding
immediately after to such Capital Transaction; and
Y = the number of shares of Common Stock outstanding
immediately prior to such Capital Transaction.
(iii) The "Series B Conversion Price" shall be defined
as the fraction obtained by dividing the initial Series B Stated Value per share
by the Series B Conversion Factor in effect at the time such calculation is
made. The Series B Conversion Price shall initially be equal to $879.66 and
shall be subject to adjustment from time to time as hereinafter provided in
subsection (iv) below. Upon each adjustment of the Series B Conversion Price,
the Series B Conversion Factor shall be recalculated so that it is equal to the
fraction obtained by dividing the Series B Stated Value per share by the Series
B Conversion Price that is a result of the calculation set forth in subsection
(iv) below.
(iv) If the Corporation shall after the date hereof
issue or sell any Common Stock (other than Common Stock into which the Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E
Preferred Stock is convertible, or options to purchase shares of Common Stock
granted or to be granted pursuant to any stock option plan adopted by the
Corporation and its stockholders, or Common Stock issuable upon exercise of
warrants delivered in connection with the purchase of Series C Preferred Stock)
without consideration or for a consideration per share less than the Series B
Conversion Price in effect immediately prior to the issuance of such Common
Stock, the Series B Conversion Price in effect immediately prior to such
issuance shall forthwith (except as provided below in Section 3(d)(v)) be
reduced to that price that is equal to the fraction obtained by dividing:
(A) an amount equal to (x) the total number of
shares of Common Stock outstanding immediately prior to such issuance or sale
multiplied by the Series B Conversion Price in effect immediately prior to such
issuance or sale, plus (y) the consideration, if any, received or deemed to be
received, by the Corporation upon such issuance or sale, by
(B) the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
The provisions of this Section 4(c)(iv) shall not apply under any of the
circumstances for which an adjustment is provided in Section 4(c)(ii) above.
(v) For the purposes of any adjustment of the Series B
Conversion Price pursuant to this Section 4, the following provisions shall be
applicable:
(A) In the case of the issuance of Common Stock
for cash, the consideration received therefor shall be deemed to be the amount
of cash paid therefor without deduction of any discounts, commissions or other
expenses allowed, paid or incurred
- 7 -
<PAGE> 8
by the Corporation for any underwriting or otherwise in connection with the
issuance and sale thereof.
(B) In the case of the issuance of Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash received therefor shall be deemed to be the fair value thereof as
determined by the Board of Directors of the Corporation without deduction for
any discounts, commissions or other expenses allowed, paid or incurred by the
Corporation for any underwriting or otherwise in connection with the issuance
and sale thereof.
(C) In the case of the issuance of options to
purchase or rights to subscribe for Common Stock, the issuance of any securities
(other than the Series B Preferred Stock) by their terms convertible into or
exchangeable for Common Stock or the granting of any options to purchase or
rights to subscribe for such convertible or exchangeable securities:
(w) The aggregate number of shares of
Common Stock initially deliverable upon exercise of such options or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were granted or issued, as the case may be, and for a
consideration equal to the consideration, if any (determined in the same manner
provided in subdivisions (A) and (B) above of this Section 4(c)(v) with respect
to cash consideration and consideration other than cash), received by the
Corporation upon the grant or issuance of such options or rights plus the
minimum purchase price provided in such options or rights for the Common Stock
covered thereby;
(x) The aggregate number of shares of
Common Stock initially deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have been
issued at the time such securities were issued or such options were granted, and
for a consideration equal to the consideration received by the Corporation for
any such securities and related options or rights (excluding any cash received
on account of accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon the conversion or
exchange of such securities or the exercise of any related options or rights
(the consideration in each case to be determined in the same manner as provided
in subdivision (w) above);
(y) On any change in the number of
shares of Common Stock deliverable upon exercise of such options or rights or
conversion of or exchange for such convertible or exchangeable securities, other
than a change resulting from anti-dilution provisions thereof not more favorable
to the holder thereof than those contained herein, the Series B Conversion Price
shall forthwith be readjusted to such Series B Conversion Price as would have
obtained had the adjustment made upon the issuance of such options, rights,
securities or options or rights related to such securities not covered prior to
such change been made upon the basis of such changed terms; and
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<PAGE> 9
(z) On the expiration of such options
or rights, the termination of such right to convert or exchange or the
expiration of the options or rights related to such convertible or exchangeable
securities, the Series B Conversion Price shall forthwith be readjusted to such
Series B Conversion Price as would have obtained had the readjustment been made
upon the issuance of such options. rights, securities or options or rights
related to such securities for only the number of shares of Common Stock
actually issued upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the options or rights
related to such securities.
(d) Notice of Change in Series B Conversion Factor. Whenever
the Series B Conversion Factor is adjusted as provided in Section 4(c), the
Corporation shall forthwith compute the adjusted Series B Conversion Factor in
accordance with this Section 4 and prepare a certificate signed by the President
or any Vice President and the Secretary, the Treasurer, any Assistant Secretary
or Assistant Treasurer of the Corporation setting forth the adjusted Series B
Conversion Factor, the method of calculation thereof in reasonable detail and
the facts requiring such adjustment and upon which such adjustment is based,
which certificate shall be conclusive, final and binding evidence of the
correctness of the adjustment, and shall mail a notice stating that the Series B
Conversion Factor has been adjusted, the facts requiring such adjustment and
upon which such adjustment is based and setting forth the adjusted Series B
Conversion Factor, to the holders of record of the outstanding shares of the
Series B Preferred Stock at or prior to the time the Corporation mails an
interim statement if any, to its stockholders covering the fiscal quarter period
during which the facts requiring such adjustment occurred, but in any event
within 45 days of the end of such fiscal quarter period.
(e) No Fractional Shares. Notwithstanding anything herein to
the contrary, no fractional shares of Common Stock shall be issued to any holder
of Series B Preferred Stock on conversion of such holder's Series B Preferred
Stock. With respect to any fraction of a share of Common Stock called for upon
any conversion after completion of the calculation of the aggregate number of
shares of Common Stock to be issued to such holder, the Corporation shall pay to
such holder an amount in cash equal to any fractional share to which such holder
would be entitled, multiplied by the current market value of a share, as
determined by the Board of Directors of the Corporation.
(f) Reservation of Common Stock. The Corporation shall at
all times reserve and keep available out of its authorized but unissued Common
Stock, solely for issuance upon conversion of shares of Series B Preferred Stock
as herein provided, such number of shares of Common Stock as shall be issuable
from time to time upon the conversion of all of the shares of Series B Preferred
Stock at the time issued and outstanding.
5. Redemption at the Option of Holder.
(a) Each holder of Series B Preferred Stock shall have the
right, beginning the date such holder receives the Corporation's audited
financial statements for the year ending December 31, 2003, but in no event
later than June 30, 2004, and continuing thereafter until exercised, to require
such holder's shares of Series B Preferred Stock to be redeemed by the
Corporation, in whole or in part, for cash at their Series B Stated Value,
without any dividends.
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<PAGE> 10
(b) Any holder of record of any share of the Series B
Preferred Stock may exercise such holder's right to receive the payment of cash
due under the provisions of this Section 5 on a date specified by such holder
(the "Series B Redemption Date"), upon no less than ten days' prior written
notice of such date to the Corporation. The amount payable pursuant to Section
5(a) shall be paid in cash or by wire or check on the Series B Redemption Date.
From and after payment on the Series B Redemption Date (A) all rights of the
holders of any shares of Series B Preferred Stock shall cease and terminate; and
(B) the shares of Series B Preferred Stock shall no longer be deemed
outstanding.
6. Liquidation Rights.
(a) In the event of any liquidation, dissolution or winding
up (either voluntary or involuntary) of the Corporation (a "Liquidation"), the
holders of the Series B Preferred Stock shall be entitled to receive, before any
distribution or payments are made upon any Common Stock or any other security
subordinate to the Series B Preferred Stock, after payment by the Corporation of
all sums due all creditors, and pari passu with the holders of the Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock and
proportionate to their relative ownership interests in the Corporation, to be
paid out of the assets of the Corporation available for distributions to its
stockholders, the Series B Stated Value per share for each outstanding share of
Series B Preferred Stock. If, upon a Liquidation, the assets available for
distribution to the holders of Series B Preferred Stock shall be insufficient to
pay such holders their liquidation preference in full, then such holders shall
share ratably in the distribution of such assets in proportion to the respective
sums which would otherwise be payable upon such distribution if all sums so
payable to the holders of Series B Preferred Stock were paid in full.
(b) A merger or consolidation involving the Corporation and
a sale, lease or transfer of all or substantially all of the assets of the
Corporation shall, at the option of holders of a majority of the Series B
Preferred Stock, be deemed a Liquidation, unless in connection with such
transaction, each holder of Series B Preferred Stock receives a preferred stock
having terms and conditions which are no less favorable than the terms and
conditions of the Series B Preferred Stock.
7. Notices. Any notice required herein to be given to a holder of
the Series B Preferred Stock shall be deemed to be given if deposited in the
United States mail, first class postage prepaid, and addressed to the holder of
record at such holder's address appearing on the books of the Corporation.
8. Replacement. Upon receipt of evidence of the ownership and the
loss, theft, destruction or mutilation of any certificate evidencing one or more
shares of Series B Preferred Stock, and an agreement of the holder to indemnify
reasonably satisfactory to the Corporation, the Corporation will (at its
expense) execute and deliver in replacement of such certificates a new
certificate representing the number of shares represented by such lost, stolen,
destroyed or mutilated certificate.
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<PAGE> 11
B. SERIES C CONVERTIBLE PREFERRED STOCK.
1. Designation; Number of Shares. The designation of said series
shall be Series C Convertible Preferred Stock (the "Series C Preferred Stock").
The number of shares of Series C Preferred Stock shall be 2,194.
2. Dividend Rights. The holders of the outstanding shares of
Series C Preferred Stock shall be entitled to receive, and shall be paid
whenever funds are legally available therefor, dividends in an amount at least
equal to the amount of any dividends declared or to be paid with respect to that
number of shares of Common Stock into which the shares of Series C Preferred
Stock are convertible on the date of such dividend and which shall be paid prior
and in preference to any such dividend as may be declared from time to time with
respect to the Common Stock and pari passu with the holders of the Series D
Preferred Stock and Series E Preferred Stock. No dividends may be paid with
respect to the Common Stock of the Corporation until all dividends declared or
accrued on all outstanding shares of the Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock have been set apart and paid.
3. Conversion of Series C Preferred Stock.
(a) Each share of Series C Preferred Stock shall be
convertible, at the option of the holder thereof into that number of fully paid
and nonassessable shares of Common Stock as is determined by multiplying 500 by
the Series C Conversion Factor (as defined below). Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of the surrender of the shares of Series C Preferred Stock to be converted in
accordance with the procedures described in Sections 3(b) through 3(d) below.
(b) The rights of conversion herein provided shall be
exercised by any holder of shares of Series C Preferred Stock by giving written
notice that such holder elects to convert a stated number of shares of Series C
Preferred Stock into Common Stock and by surrender of a certificate or
certificates for the shares to be so converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holder or holders of the
Series C Preferred Stock) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of Common
Stock shall be issued.
(c) Promptly after the receipt of the written notice
referred to in Section 3(b) and surrender of the certificate or certificates for
the share or shares of the Series C Preferred Stock to be converted, the
Corporation shall issue and deliver, or cause to be issued and delivered, to
such holder, registered in such name or names as such holder may direct, subject
to compliance with applicable laws to the extent such designation shall involve
a transfer, a certificate or certificates for the number of whole shares of
Common Stock issuable upon the conversion of such share or shares of Series C
Preferred Stock. To the extent permitted by law, such conversion shall be deemed
to have been effected as of the close of business on the date on which the
certificate or certificates for such share or shares shall have been surrendered
as
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<PAGE> 12
aforesaid, and at such time the rights of the holders of such share or shares of
Series C Preferred Stock shall cease, and the person or persons in whose name or
names any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby.
(d) The initial conversion factor for the Series C Preferred
Stock shall be 1, subject to adjustment in accordance with the provisions of
this Section 3(d). The conversion factor in effect from time to time, as
adjusted pursuant to this Section 3(d), is referred to herein as the "Series C
Conversion Factor."
(i) Each adjustment to the Series C Conversion Factor
shall be calculated to the nearest four decimal places.
(ii) In the event that: (A) the Corporation shall, at
any time, pay a dividend in, or make a distribution on its Common Stock or any
other equity securities (other than Series C Preferred Stock) in, shares of
Common Stock; (B) the Corporation shall, at any time, by subdivision of its
shares of outstanding Common Stock, by reclassification, stock split or
otherwise, subdivide its outstanding shares of Common Stock into a greater
number of shares; (C) the Corporation shall, at any time, combine its
outstanding shares of Common Stock into a lesser number of shares, by
reclassification, reverse stock split, or otherwise (for purposes of this
Section 3(d)(ii), the events described in (A), (B) and (C) above shall be
referred to as "Capital Transactions"); then the Series C Conversion Factor then
in effect shall be adjusted to a number determined by multiplying the Series C
Conversion Factor in effect immediately prior to such Capital Transaction by the
following fraction:
X
---
Y
wherein:
X = the number of shares of Common Stock outstanding immediately
after such Capital Transaction; and
Y = the number of shares of Common Stock outstanding immediately
prior to such Capital Transaction.
(iii) With respect to each share of Series C Preferred
Stock, the "Series C Conversion Price" shall be defined as the fraction obtained
by dividing the purchase price paid to the Corporation (the "Series C Stated
Value") for that share by the Series C Conversion Factor in effect at the time
such calculation is made. Upon each adjustment of the Series C Conversion Price
pursuant to subsection (iv) below, the Series C Conversion Factor for each share
of Series C Preferred Stock shall be recalculated so that it is equal to the
fraction obtained by dividing the Series C Stated Value for that share by the
Series C Conversion Price that is a result of the calculation set forth in
subsection (iv) below.
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<PAGE> 13
(iv) If the Corporation shall after the date hereof
issue or sell any Common Stock (other than Common Stock into which the Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E
Preferred Stock is convertible, or options to purchase shares of Common Stock
granted or to be granted pursuant to any stock option plan adopted by the
Corporation and its stockholders, or Common Stock issuable upon exercise of
warrants delivered in connection with the purchase of Series C Preferred Stock),
without consideration or for a consideration per share less than the Series C
Conversion Price in effect immediately prior to the issuance of such Common
Stock, the Series C Conversion Price in effect immediately prior to such
issuance shall forthwith (except as provided below in Section 3(d)(v)) be
reduced to that price that is equal to the fraction obtained by dividing:
(A) an amount equal to (x) the total number of
shares of Common Stock outstanding immediately prior to such issuance or sale
multiplied by the Series C Conversion Price in effect immediately prior to such
issuance or sale, plus (y) the consideration, if any, received or deemed to be
received, by the Corporation upon such issuance or sale, by
(B) the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
The provisions of this Section 3(d)(iv) shall not apply under any of the
circumstances for which an adjustment is provided in subsection (ii) above.
(v) For the purposes of any adjustment of the Series C
Conversion Price pursuant to this Section 3, the following provisions shall be
applicable:
(A) In the case of the issuance of Common Stock
for cash, the consideration received therefor shall be deemed to be the amount
of cash paid therefor without deduction of any discounts, commissions or other
expenses allowed, paid or incurred by the Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(B) In the case of the issuance of Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash received therefor shall be deemed to be the fair value thereof as
determined by the Board of Directors of the Corporation without deduction for
any discounts, commissions or other expenses allowed, paid or incurred by the
Corporation for any underwriting or otherwise in connection with the issuance
and sale thereof.
(C) In the case of the issuance of options to
purchase or rights to subscribe for Common Stock, the issuance of any securities
(other than the Series C Preferred Stock) by their terms convertible into or
exchangeable for Common Stock or the granting of any options to purchase or
rights to subscribe for such convertible or exchangeable securities:
(w) The aggregate number of shares of
Common Stock initially deliverable upon exercise of such options or rights to
subscribe for Common
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<PAGE> 14
Stock shall be deemed to have been issued at the time such options or rights
were granted or issued, as the case may be, and for a consideration equal to the
consideration, if any (determined in the same manner provided in subdivisions
(A) and (B) above of this Section 3(d)(v) with respect to cash consideration and
consideration other than cash), received by the Corporation upon the grant or
issuance of such options or rights plus the minimum purchase price provided in
such options or rights for the Common Stock covered thereby;
(x) The aggregate number of shares of
Common Stock initially deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have been
issued at the time such securities were issued or such options were granted, and
for a consideration equal to the consideration received by the Corporation for
any such securities and related options or rights (excluding any cash received
on account of accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon the conversion or
exchange of such securities or the exercise of any related options or rights
(the consideration in each case to be determined in the same manner as provided
in subdivision (w) above);
(y) On any change in the number of
shares of Common Stock deliverable upon exercise of such options or rights or
conversion of or exchange for such convertible or exchangeable securities, other
than a change resulting from anti-dilution provisions thereof not more favorable
to the holder thereof than those contained herein, the Series C Conversion Price
shall forthwith be readjusted to such Series C Conversion Price as would have
obtained had the adjustment made upon the issuance of such options, rights,
securities or options or rights related to such securities not covered prior to
such change been made upon the basis of such changed terms; and
(z) On the expiration of such options
or rights, the termination of such right to convert or exchange or the
expiration of the options or rights related to such convertible or exchangeable
securities, the Series C Conversion Price shall forthwith be readjusted to such
Series C Conversion Price as would have obtained had the readjustment been made
upon the issuance of such options, rights, securities or options or rights
related to such securities for only the number of shares of Common Stock
actually issued upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the options or rights
related to such securities.
(e) Whenever the Series C Conversion Factor is adjusted as
provided in Section 3(d), the Corporation shall forthwith compute the adjusted
Series C Conversion Factor in accordance with this Section 3 and prepare a
certificate signed by the President or any Vice President and the Secretary, the
Treasurer, any Assistant Secretary or Assistant Treasurer of the Corporation
setting forth the adjusted Series C Conversion Factor, the method of calculation
thereof in reasonable detail and the facts requiring such adjustment and upon
which such
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<PAGE> 15
adjustment is based, which certificate shall be conclusive, final and binding
evidence of the correctness of the adjustment, and shall mail a notice stating
that the Series C Conversion Factor has been adjusted, the facts requiring such
adjustment and upon which such adjustment is based setting forth the adjusted
Series C Conversion Factor, to the holders of record of the outstanding shares
of the Series C Preferred Stock at or prior to the time the Corporation mails an
interim statement, if any, to its stockholders covering the fiscal quarter
period during which the facts requiring such adjustment occurred, but in any
event within 45 days of the end of such fiscal quarter period.
(f) Notwithstanding anything herein to the contrary, no
fractional shares of Common Stock shall be issued to any holder of Series C
Preferred Stock on conversion of such holder's Series C Preferred Stock. With
respect to any fraction of a share of Common Stock called for upon any
conversion after completion of the calculation of the aggregate number of shares
of Common Stock to be issued to such holder, the Corporation shall pay to such
holder an amount in cash equal to any fractional share to which such holder
would be entitled, multiplied by the current market value of a share, as
determined by the Board of Directors of the Corporation.
(g) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock, solely for issuance
upon conversion of shares of Series C Preferred Stock as herein provided, such
number of shares of Common Stock as shall be issuable from time to time upon the
conversion of all of the shares of Series C Preferred Stock at the time issued
and outstanding.
4. Liquidation Rights. In the event of any liquidation,
dissolution or winding up (either voluntary or involuntary) of shall be entitled
to receive, before any distribution or payments are made upon the Corporation (a
"Liquidation"), the holders of the Series C Preferred Stock any Common Stock or
any other security subordinate to the Series C Preferred Stock, after payment by
the Corporation of all sums due all creditors, and pari passu with the holders
of the Series B Preferred Stock, Series D Preferred Stock and Series E Preferred
Stock and proportionate to their relative ownership interests in the
Corporation, to be paid out of the assets of the Corporation available for
distribution to its stockholders, an amount equal to the Series C Stated Value
for each outstanding share of Series C Preferred Stock. If, upon a Liquidation,
the assets available for distribution to the holders of Series C Preferred Stock
shall be insufficient to pay such holders their liquidation preference in full,
then such holders shall share ratably in the distribution of such assets in
proportion to the respective sums which would otherwise be payable upon such
distribution if all sums so payable to the holders of Series C Preferred Stock
were paid in full.
5. Voting Rights. Except to the extent otherwise expressly
provided by the DGCL, the holders of shares of Series C Preferred Stock shall
not have any right to vote on any matter submitted to the shareholders of the
Corporation for a vote.
6. Pre-emptive Purchase Rights. In the event of any offering of
shares of Common Stock or other securities of the Corporation convertible into
or exercisable for Common Stock other than pursuant to an underwritten public
offering (excluding (i) issuances of shares of Common Stock pursuant to
conversion of the shares of Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred Stock, (ii) shares issuable
pursuant to warrants outstanding on the date hereof or options granted under the
Corporation's
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<PAGE> 16
1995 Incentive Stock Plan or (iii) other securities outstanding as of the date
hereof), the Corporation shall send written notice thereof to the holders of
Series C Preferred Stock not less than forty-five (45) days prior to such public
or private offering, which notice shall set forth all material terms of the
proposed transaction, including, without limitation, the manner of sale and the
per share sale price or the amount and type of other consideration to be
received by the Corporation. In the event that the Corporation offers shares or
other securities where the value of such shares or other securities is based
upon a valuation of the Corporation that is equal to or greater than $47.5
million, then the holders of Series E Preferred Stock shall have the first
right, by sending irrevocable written notice thereof to the Corporation within
twenty (20) days after receipt of the Corporation's notice, to purchase up to
Ten Million Dollars ($10,000,000) of such shares or other securities being
offered by the Corporation at the same price offered to the public or in the
private offering (or, if the sale is not for cash, at the fair market value of
the property or other consideration received by the Corporation (as determined
by an independent third party appraiser selected by a majority vote of the
shares held by the holders of the Series D Preferred Stock, Series B Preferred
Stock and Series E Preferred Stock)), of which up to Two Million Dollars
($2,000,000) may be allocated and transferred, in the sole discretion of the
holders of the Series E Preferred Stock, to Banque Paribas or its affiliates,
and the holders of Series C Preferred Stock shall have the right, by sending
irrevocable written notice thereof to the Company within thirty (30) days after
receipt of the Company's notice, to purchase their pro rata portion of any
remaining shares or other securities in the offering on the same basis as the
holders of Series E Preferred Stock. In the event that the Corporation offers
shares or other securities where the value of such shares or other securities is
based upon a valuation of the Corporation that is less than $47.5 million, then
the holders of Series C Preferred Stock shall have the right, by sending
irrevocable written notice thereof to the Corporation within twenty (20) days
after receipt of the Corporation's notice, to purchase at the same price sold to
the public or in the private offering (or, if the sale is not for cash, at the
fair market value of the property or other consideration received by the
Corporation (as determined by an independent third party appraiser selected by a
majority vote of the shares held by the holders of the Series B Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock)), such number of shares
of Common Stock or other securities as is necessary to maintain such holder's
respective percentage ownership of Common Stock on a fully diluted basis, as it
existed immediately prior to such offering. A closing for the purchase of Common
Stock or other securities pursuant to this Section 6 shall occur on the later of
(i) the date on which such public or private offering occurs and (ii) such later
date as may be agreed to by the holders of Series C Preferred Stock who have
exercised their rights hereunder and the Corporation, at a time and place
specified by such holders in a notice provided to the Corporation at least ten
(10) days prior to such closing. In connection with such closing, the
Corporation and such holders shall provide such customary closing certificates
and opinions as such holders or the Corporation, as appropriate, shall
reasonably request.
7. Status of Converted or Redeemed Stock. In case any shares of
Series C Preferred Stock shall be converted pursuant to the terms hereof, the
shares so converted shall resume the status of authorized but unissued shares of
Preferred Stock and shall no longer be designated as Series C Preferred Stock.
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<PAGE> 17
C. SERIES D CONVERTIBLE PREFERRED STOCK.
1. Designation; Number of Shares. The designation of this Series
of Preferred Stock shall be "Series D Convertible The total number of shares of
Series D Preferred Stock that may be issued shall Preferred Stock," par value
$0.01 per share (the "Series D Preferred Stock"). be 843 shares. The Series D
Preferred Stock shall have an initial stated value of $1,187.00 per share (the
"Series D Stated Value"). In the event of any stock split, stock dividend,
combination or other recapitalization transaction by which the Corporation
increases or decreases its outstanding Series D Preferred Stock, the Series D
Stated Value per share of Series D Preferred Stock shall be adjusted to reflect
such recapitalization.
2. Voting Rights.
(a) The holder of each share of Series D Preferred Stock
shall have the right to one vote for each share of Common Stock into which such
Series D Preferred Stock could then be converted, and with respect to such vote,
such holder shall have full voting rights and powers equal to the voting rights
and powers of the holders of Common Stock, and shall be entitled to notice of
any shareholders' meeting in accordance with the By-laws of this corporation,
and shall be entitled to vote, together with holders of Common Stock, with
respect to any question upon which holders of Common Stock have the right to
vote. Fractional votes shall not, however, be permitted and any fractional
voting rights available on an as-converted basis (after aggregating all shares
into which shares of Series D Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number (with one-half being
rounded upward).
(b) The holders of Series D Preferred Stock shall also be
entitled to vote as a class upon the following matters, which matters shall
require the approval of the holders of a majority of the outstanding shares of
Series D Preferred Stock:
(i) the merger, consolidation, division, mandatory
share exchange, recapitalization, liquidation or sale of all or substantially
all of the assets of the Corporation;
(ii) the amendment of the By-laws or Certificate of
Incorporation of the Corporation in a way that adversely affects the rights,
preferences or privileges of the holders of the Series D Preferred Stock, or the
rights and protections accorded to the directors of the Corporation;
(iii) the payment or making of any dividends or
distributions on or redemptions of any equity securities (except with respect to
the redemption of any equity interests held by Intelligent Investment Partners,
Inc. and its assigns, in accordance with that certain Term Sheet dated May 28,
1998), provided, however, the Corporation may redeem equity securities from
departed or terminated employees;
(iv) the incurrence of funded indebtedness, capitalized
lease obligations or guarantees of third party debt, in each case involving an
amount in excess of $1,000,000;
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<PAGE> 18
(v) the engagement in any transaction which involves
dealings between the Company and insiders and affiliates (including the
authorization or issuance of stock options); and
(vi) the issuance of an equity security senior to or
pari passu in liquidation preference with the Series D Preferred Stock.
3. Dividends.
(a) The holders of record of shares of the Series D
Preferred Stock shall be entitled to receive, when and if declared out of funds
legally available therefor, an annual, cumulative cash dividend (the "Series D
Preferred Dividend"), from the date of the issuance of the Series D Preferred
Stock, at the annual rate of 10% of the Series D Stated Value per share of
Series D Preferred Stock. The Series D Preferred Dividend shall accrue and
accumulate (without compounding) beginning upon issuance of the Series D
Preferred Stock and shall cease to accrue on and after the date of the earlier
of (i) the conversion or redemption of such shares, or (ii) the Sale (as
hereinafter defined) of the Corporation or a Public Offering (as hereinafter
defined). If a Sale or Public Offering occurs in either case where the value of
the Corporation is equal to or greater than $110 Million, all accrued Series D
Preferred Dividends shall be forfeited by the holders of the Series D Preferred
Stock.
(b) Except as set forth in Section 3(a) above, unless
earlier paid, any and all Series D Preferred Dividends that have accrued shall
be payable in full at the beginning of the Put Option Period (as hereinafter
defined) or upon an earlier Sale or Public Offering in either case where the
value of the Corporation is less than $110 Million.
(c) If dividends are declared and paid on the Corporation's
Common Stock, then the Series D Preferred Stock shall receive dividends pari
passu with the holders of the Series C Convertible Preferred Stock and Series E
Convertible Preferred Stock on the number of shares of Common Stock into which
the Series D Preferred Stock would be converted on the day such Common Stock
dividends are declared.
(d) A "Sale" shall mean (i) the merger, consolidation,
division, mandatory share exchange, sale of stock or other transaction resulting
in the stockholders of the Corporation prior to the transaction owning less than
50% of the voting stock of the Corporation after the transaction or (ii) a sale
of all or substantially all of the assets of the Corporation. A "Public
Offering" shall mean an underwritten public offering pursuant to an effective
Registration Statement under the Securities Act of 1933, as amended, covering
the offer and sale by the Corporation of its Common Stock (by such a
registration statement or statements being declared effective by the Securities
and Exchange Commission and such Securities being registered under Section 12 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (regardless
of whether the Corporation is subject to the filing requirements of Section
15(d) of the Exchange Act).
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<PAGE> 19
4. Conversion Rights of Series D Preferred Stock.
(a) Optional Conversion.
(i) A holder of record of any share or shares of
Series D Preferred Stock shall have the right, at any time, at such holder's
option, to convert, without the payment of any additional consideration, each
share of Series D Preferred Stock held by such holder into that number of fully
paid and non-assessable shares of Common Stock as is determined by multiplying 1
by the Series D Conversion Factor (as defined below).
(ii) Upon the optional conversion of any shares of
Series D Preferred Stock, such shares of Series D Preferred Stock shall resume
the status of authorized and unissued shares of the Series D Preferred Stock,
par value $0.01 per share, of the Corporation, without designation as to series
until such shares are once more designated as part of a particular series by the
Board of Directors.
(iii) if a holder of shares of Series D Preferred Stock
desires to exercise the optional conversion right pursuant to this subsection
4(a), such holder shall give written notice to the Corporation of such holder's
election to convert a stated number of shares of Series D Preferred Stock into
shares of Common Stock, at the conversion rate then in effect, which shall be
accompanied by the certificate or certificates representing such shares of
Series D Preferred Stock that shall be converted into Common Stock. The notice
shall also contain a statement of the name or names in which the certificate or
certificates for Common Stock shall be issued. If such certificate or
certificates are to be issued to any person or persons other than the registered
holder or holders of such certificate or certificates, or if such certificate or
certificates are registered in the name or names of any person or persons other
than the person or persons signing the notice, the signatures on the notice must
be guaranteed by a participant in the Security Transfer Agents Medallion Program
or the New York Stock Exchange Medallion Signature Guarantee Program. Promptly
after receiving the aforesaid notice and certificate or certificates
representing the Series D Preferred Stock surrendered for conversion, the
Corporation shall issue and deliver to such holder of Series D Preferred Stock,
or to such holder's nominee or nominees, a certificate or certificates for the
number of shares of Common Stock issuable upon conversion of such Series D
Preferred Stock, and the certificates representing shares of Series D Preferred
Stock surrendered for conversion shall be canceled by the Corporation. If the
number of shares represented by the certificate or certificates surrendered for
conversion shall exceed the number of shares to be converted, the Corporation
shall issue and deliver to the person entitled thereto a certificate
representing the balance of any unconverted shares.
(b) Mandatory Conversion.
(i) Immediately prior to the first closing of a Qualified
Public Offering (as defined below) of the Common Stock of the Corporation, each
share of Series D Preferred Stock held by such holder shall immediately be
converted into that number of fully paid and non-assessable shares of Common
Stock as is determined by multiplying 1 by the Series D Conversion Factor (as
defined below).
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<PAGE> 20
(ii) A "Qualified Public Offering" is hereby defined as a
Public Offering in which the pre-money valuation of the Corporation is no less
than $82.5 Million and the aggregate proceeds (net of any underwriter's
discount) to the Corporation exceed $20 Million.
(iii) The Corporation shall give each holder notice of the
occurrence of a Qualified Public Offering within a reasonable time of the
initial filing of a registration statement. At any time at or after the closing
of the Qualified Public Offering, the Corporation shall deliver to each holder
of Series D Preferred Stock such number of shares of Common Stock into which
such holder's shares are then convertible upon surrender by such holder of
certificates representing the shares of Series D Preferred Stock held by such
holder or presentation of an affidavit of loss certificate together with an
indemnity satisfactory to the Corporation.
(c) Series D Conversion Factor. The initial conversion
factor for the Series D Preferred Stock shall be 500, subject to adjustment in
accordance with the provisions of this Section 4(c). The conversion factor in
effect from time to time, as adjusted to this Section 4(c), is referred to
herein as the "Series D Conversion Factor".
(i) Each adjustment to the Series D Conversion Factor
shall be calculated to the nearest four decimal places.
(ii) In the event that: (A) the Corporation shall, at
any time, pay a dividend in, or make a distribution on its Common Stock or any
other equity securities in, shares of Common Stock; (B) the Corporation shall,
at any time, by subdivision of its shares of outstanding Common Stock, by
reclassification, stock split or otherwise, subdivide its outstanding shares of
Common Stock into a greater number of shares; (C) the Corporation shall, at any
time, combine its outstanding shares of Common Stock into a lesser number of
shares, by reclassification, reverse stock split or otherwise (for purposes of
this Section 4(c)(ii), the events described in (A), (B) and (C) above shall be
referred to as "Capital Transactions"), then the Series D Conversion Factor then
in effect shall be adjusted to a number determined by multiplying the Series D
Conversion Factor in effect immediately prior to such Capital Transaction by the
following fraction:
X
---
Y
wherein:
X = the number of shares of Common Stock outstanding
immediately after such Capital Transaction; and
Y = the number of shares of Common Stock outstanding
immediately prior to such Capital Transaction.
(iii) The "Series D Conversion Price" shall be defined
as the fraction obtained by dividing the initial Series D Stated Value per share
by the Series D Conversion Factor in effect at the time such calculation is
made. The Series D Conversion Price
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<PAGE> 21
shall initially be equal to $2.374 and shall be subject to adjustment from time
to time as hereinafter provided in subsection (iv) below. Upon each adjustment
of the Series D Conversion Price, the Series D Conversion Factor shall be
recalculated so that it is equal to the fraction obtained by dividing the Series
D Stated Value per share by the Series D Conversion Price that is a result of
the calculation set forth in subsection (iv) below.
(iv) If the Corporation shall after the date hereof
issue or sell any Common Stock (other than Common Stock into which the Seris B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock or
the Series E Preferred Stock is convertible or Common Stock issuable upon
exercise of warrants outstanding on the date hereof or options granted or to be
granted to employees or consultants of the Corporation pursuant to any stock
option plan adopted by the Corporation and its stockholders), without
consideration or for a consideration per share less than the Series D Conversion
Price in effect immediately prior to the issuance of such Common Stock, the
Series D Conversion Price in effect immediately prior to such issuance shall
forthwith (except as provided below in Section 4(c)(v)) be reduced to that price
that is equal to the fraction obtained by dividing:
(A) an amount equal to (x) the total number of
shares of Common Stock outstanding immediately prior to such issuance or sale
multiplied by the Series D Conversion Price in effect immediately prior to such
issuance or sale, plus (y) the consideration, if any, received or deemed to be
received, by the Corporation upon such issuance or sale, by
(B) the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
The provisions of this Section 4(c)(iv) shall not apply under any of the
circumstances for which an adjustment is provided in Section 4(c)(ii) above.
(v) For the purposes of any adjustment of the Series D
Conversion Price pursuant to this Section 4, the following provisions shall be
applicable:
(A) In the case of the issuance of Common Stock
for cash, the consideration received therefor shall be deemed to be the amount
of cash paid therefor without deduction of any discounts, commissions or other
expenses allowed, paid or incurred by the Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(B) In the case of the issuance of Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash received therefor shall be deemed to be the fair value thereof as
determined by the Board of Directors of the Corporation without deduction for
any discounts, commissions or other expenses allowed, paid or incurred by the
Corporation for any underwriting or otherwise in connection with the issuance
and sale thereof.
(C) In the case of the issuance of options to
purchase or rights to subscribe for exchangeable for Common Stock or the
granting of any options to purchase or Common Stock, the issuance of any
securities by their terms convertible into or rights to subscribe for such
convertible or exchangeable securities:
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<PAGE> 22
(w) The aggregate number of shares of
Common Stock initially deliverable upon exercise of such options or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were granted or issued, as the case may be, and for a
consideration equal to the consideration, if any (determined in the same manner
provided in subdivisions (A) and (B) above of this Section 4(c)(v) with respect
to cash consideration and consideration other than cash), received by the
Corporation upon the grant or issuance of such options or rights plus the
minimum purchase price provided in such options or rights for the Common Stock
covered thereby;
(x) The aggregate number of shares of
Common Stock initially deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have been
issued at the time such securities were issued or such options were granted, and
for a consideration equal to the consideration received by the Corporation for
any such securities and related options or rights (excluding any cash received
on account of accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon the conversion or
exchange of such securities or the exercise of any related options or rights
(the consideration in each cash to be determined in the same manner as provided
in subdivision (w) above);
(y) On any change in the number of
shares of Common Stock deliverable upon exercise of such options or rights or
conversion of or exchange for such convertible or exchangeable securities, other
than a change resulting from anti-dilution provisions thereof not more favorable
to the holder thereof than those contained herein, the Series D Conversion Price
shall forthwith be readjusted to such Series D Conversion Price as would have
been obtained had the adjustment made upon the issuance of such options, rights,
securities or options or rights related to such securities not covered prior to
such change been made upon the basis of such changed terms; and
(z) On the expiration of such options
or rights, the termination of such right to convert or exchange or the
expiration of the options or rights related to such convertible or exchangeable
securities, the Series D Conversion Price shall forthwith be readjusted to such
Series D Conversion Price as would have obtained had the readjustment been made
upon the issuance of such options, rights, securities or options or rights
related to such securities for only the number of shares of Common Stock
actually issued upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the options or rights
related to such securities.
(d) Notice of Change in Series D Conversion Factor. Whenever
the Series D Conversion Factor is adjusted as Series D Conversion Factor in
accordance with this Section 4 and prepare a provided in Section 4(c), the
Corporation shall forthwith compute the adjusted certificate signed by the
President or Chief Executive Officer and the Secretary, the Treasurer, any
Assistant Secretary or Assistant Treasurer of the Corporation setting forth the
adjusted Series D Conversion Factor, the method of calculation thereof in
reasonable detail and the facts requiring such adjustment and upon which such
adjustment is based, which certificate shall be conclusive, final and binding
evidence of the correctness of the adjustment, and shall
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<PAGE> 23
mail a notice stating that the Series D Conversion Factor has been adjusted, the
facts requiring such adjustment and upon which such adjustment is based and
setting forth the adjusted Series D Conversion Factor, to the holders of record
of the outstanding shares of the Series D Preferred Stock at or prior to the
time the Corporation mails an interim statement, if any, to its stockholders
covering the fiscal quarter period during which the facts requiring such
adjustment occurred, but in any event within 45 days of the end of such fiscal
quarter period.
(e) No Fractional Shares. Notwithstanding anything herein to
the contrary, no fractional shares of Common Stock shall be issued to any holder
of Series D Preferred Stock on conversion of such holder's Series D Preferred
Stock. With respect to any fraction of a share of Common Stock called for upon
any conversion after completion of the calculation of the aggregate number of
shares of Common Stock to be issued to such holder, the Corporation shall pay to
such holder an amount in cash equal to any fractional share to which such holder
would be entitled, multiplied by the current market value of a share, as
determined by the Board of Directors of the Corporation.
(f) Reservation of Common Stock. The Corporation shall at
all times reserve and keep available out of its authorized but unissued Common
Stock, solely for issuance upon conversion of shares of Series D Preferred Stock
as herein provided, such number of shares of Common Stock as shall be issuable
from time to time upon the conversion of all of the shares of Series D Preferred
Stock at the time issued and outstanding.
5. Redemption at the Option of Holder. Each holder of Series D
Preferred Stock shall have the right beginning the date such holder's receipt of
the Corporation's audited financial statements for the year ending December 31,
2003, but in no event later than June 30, 2004 (such date constituting the
beginning of the Put Option Period), to require such holder's shares of Series D
Preferred Stock to be redeemed by the Corporation, in whole or in part, in
accordance with the terms and subject to the conditions of that certain Put
Option Agreement dated as of August 11, 1998, as amended, between the
Corporation and the holders of the Series D Preferred Stock and the other
parties thereto.
6. Liquidation Rights.
(a) In the event of any liquidation, dissolution or winding
up (either voluntary or involuntary) of the Corporation (a "Liquidation"), the
holders of the Series D Preferred Stock shall be entitled to receive, before any
distribution or payments are made upon any Common Stock or any other security
subordinate to the Series D Preferred Stock, after payment by the Corporation of
all sums due all creditors, and pari passu with the holders of the Series B
Preferred Stock, the Series C Preferred Stock and the Series E Preferred Stock
and proportionate to their relative ownership interests in the Corporation, to
be paid out of the assets of the Corporation available for distributions to its
stockholders, at the stockholders option, the Series D Stated Value per share
for each outstanding share of Series D Preferred Stock together with any accrued
but unpaid Series D Preferred Dividends or, at the Series D Preferred
stockholders' option, the consideration such holders would receive if their
Series D Preferred Stock were converted into Common Stock, provided such
consideration is paid pari passu with other holders of Common Stock. If upon
Liquidation, the assets available for distribution to the holders of Series D
Preferred Stock shall be insufficient to pay such holders their liquidation
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<PAGE> 24
preference in full, then such holders shall share ratably in the distribution of
such assets in proportion to the respective sums which would otherwise be
payable upon such distribution if all sums so payable to the holders of Series D
Preferred Stock were paid in full.
(b) A recapitalization, merger or consolidation involving
the Corporation, or a sale, lease or transfer of all or substantially all of the
assets of the Corporation shall, at the option of the holders of a majority of
the Series D Preferred Stock, be deemed a Liquidation.
(c) In case the Corporation shall consolidate with or merge
into any other entity and shall not be the continuing or surviving corporation
in such consolidation or merger and the holders of the Series D Preferred Stock
do not receive either cash or stock that is immediately tradable in a liquid
public market (subject to reasonable pooling restrictions and lockup
restrictions not in excess of 90 days) then, and in each such case, proper
provision shall be made so that each share of Series D Preferred Stock then
outstanding shall be converted into, or exchanged for, one share of preferred
stock of the acquiring corporation entitling the holder thereof to all of the
rights, powers, privileges and preferences with respect to the acquiring
corporation to which the holder of a share of Series D Preferred Stock is
entitled with respect to the Corporation, and being subject with respect to the
acquiring corporation to the qualifications, limitations and restrictions to
which a share of Series D Preferred Stock is subject with respect to the
Corporation.
7. Notices. Any notice required herein to be given to a holder of
the Series D Preferred Stock shall be deemed to be given if deposited in the
United States mail, first class postage prepaid, and addressed to the holder of
record at such holder's address appearing on the books of the Corporation.
8. Replacement. Upon receipt of evidence of the ownership and the
loss, theft, destruction or mutilation of any certificate evidencing one or more
shares of Series D Preferred Stock, and an agreement of the holder to indemnify
reasonably satisfactory to the Corporation, the Corporation will (at its
expense) execute and deliver in replacement of such certificate a new
certificate representing the number of shares represented by such lost, stolen,
destroyed or mutilated certificate.
D. SERIES E CONVERTIBLE PREFERRED STOCK.
1. Designation; Number of Shares. The designation of this Series
of Preferred Stock shall be "Series E Convertible Preferred Stock," par value
$0.01 per share (the "Series E Preferred Stock"). The total number of shares of
Series E Preferred Stock that may be issued shall be 9,643.2 shares. The Series
E Preferred Stock shall have an initial stated value of $1,555.50 per share (the
"Series E Stated Value"). In the event of any stock split, stock dividend,
combination or other recapitalization transaction by which the Corporation
increases or decreases its outstanding Series E Preferred Stock, the Series E
Stated Value per share of Series E Preferred Stock shall be adjusted to reflect
such recapitalization.
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<PAGE> 25
2. Voting Rights.
(a) The holder of each share of Series E Preferred Stock
shall have the right to one vote for each share of Common Stock into which such
Series E Preferred Stock could then be converted, and with respect to such vote,
such holder shall have full voting rights and powers equal to the voting rights
and powers of the holders of Common Stock, and shall be entitled to notice of
any shareholders' meeting in accordance with the By-laws of the Corporation, and
shall be entitled to vote, together with the holders of Common Stock, with
respect to any question upon which holders of Common Stock have the right to
vote. Fractional votes shall not, however, be permitted and any fractional
voting rights available on an as-converted basis (after aggregating all shares
into which shares of Series E Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number (with one-half being
rounded upward).
(b) The holders of Series E Preferred Stock shall also be
entitled to vote as a class upon the following matters, which matters shall
require the approval of the holders of a majority of the outstanding shares of
Series E Preferred Stock:
(i) the merger, consolidation, division, mandatory
share exchange, recapitalization, liquidation or sale of all or substantially
all of the assets of the Corporation;
(ii) the amendment of the By-laws or the Amended and
Restated Certificate of Incorporation of the Corporation in a way that adversely
affects the rights, preferences or privileges of the holders of the Series E
Preferred Stock or the rights and protections accorded to the directors of the
Corporation;
(iii) the payment or making of any dividends or
distributions on or redemptions of any equity securities, provided, however, the
Corporation may redeem equity securities from departed or terminated employees
and in accordance with the rights of any other holder of Preferred Stock of the
Corporation;
(iv) the incurrence of funded indebtedness, capitalized
lease obligations or guarantees of third party debt, in each case involving an
amount in excess of One Million Dollars ($1,000,000);
(v) the engagement in any transaction which involves
dealings between the Corporation and insiders and affiliates (including the
authorization or issuance of stock options); and
(vi) the issuance of an equity security senior to or
pari passu with respect to voting rights, dividends, conversion rights or
liquidation preference with the Series E Preferred Stock.
3. Dividends.
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<PAGE> 26
(a) The holders of record of shares of the Series E
Preferred Stock shall be entitled to receive, when and if dividend (the "Series
E Preferred Dividend"), from the date of the issuance of declared out of funds
legally available therefor, an annual, cumulative cash the Series E Preferred
Stock in the case of the first issuance thereof and from the date which is
twelve (12) months after the date of the issuance of any subsequent Series E
Preferred Stock in the case of such subsequent issuance, at the annual rate of
10% of the Series E Stated Value per share of Series E Preferred Stock. The
Series E Preferred Dividend shall accrue and accumulate (without compounding)
beginning on the dates specified in the preceding sentence and shall cease to
accrue on and after the date of the earlier of (i) the conversion or redemption
of such shares or (ii) the Sale (as hereinafter defined) of the Corporation or a
Public Offering (as hereinafter defined). If a Sale or Public Offering occurs in
either case where the value of the Corporation is equal to or greater than One
Hundred Fifty Two Million Dollars ($152,000,000), all accrued Series E Preferred
Dividends shall be forfeited by the holders of the Series E Preferred Stock.
(b) Except as set forth in Section 3(a) above, unless
earlier paid, any and all Series E Preferred Dividends that have accrued shall
be payable in full at the beginning of the Put Option Period (as hereinafter
defined) or upon an earlier Sale or Public Offering in either case where the
value of the Corporation is less than One Hundred Fifty Two Million Dollars
($152,000,000).
(c) If dividends are declared and paid on the Corporation's
Common Stock, then the Series E Preferred Stock shall receive dividends pari
passu with the holders of the Series C Preferred Stock and Series D Preferred
Stock on the number of shares of Common Stock into which the Series E Preferred
Stock would be converted on the day such Common Stock dividends are declared.
(d) A "Sale" shall mean (i) the merger, consolidation,
division, mandatory share exchange, sale of stock or other transaction resulting
in the stockholders of the Corporation prior to the transaction owning less than
50% of the voting stock of the Corporation after the transaction or (ii) a sale
of all or substantially all of the assets of the Corporation. A "Public
Offering" shall mean an underwritten public offering pursuant to an effective
Registration Statement under the Securities Act of 1933, as amended, covering
the offer and sale by the Corporation of its Common Stock (by such a
registration statement or statements being declared effective by the Securities
and Exchange Commission and such Securities being registered under Section 12 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (regardless
of whether the Corporation is subject to the filing requirements of Section
15(d) of the Exchange Act).
4. Conversion Rights of Series E Preferred Stock.
(a) Optional Conversion.
(i) A holder of record of any share or shares of
Series E Preferred Stock shall have the right, at any time, at such holder's
option, to convert, without the payment of any additional consideration, each
share of Series E Preferred Stock held by such
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<PAGE> 27
holder into that number of fully paid and non-assessable shares of Common Stock
as is determined by multiplying 1 by the Series E Conversion Factor (as defined
below)
(ii) Upon the optional conversion of any shares of
Series E Preferred Stock, such shares of Series E Preferred Stock shall resume
the status of authorized and unissued shares of the Preferred Stock, par value
$0.01 per share, of the Corporation, without designation as to series until such
shares are once more designated as part of a particular series by the Board of
Directors.
(iii) If a holder of shares of Series E Preferred Stock
desires to exercise the optional conversion right pursuant to this subsection
4(a), such holder shall give written notice to the Corporation of such holder's
election to convert a stated number of shares of Series E Preferred Stock into
shares of Common Stock, at the conversion rate then in effect, which shall be
accompanied by the certificate or certificates representing such shares of
Series E Preferred Stock that shall be converted into Common Stock. The notice
shall also contain a statement of the name or names in which the certificate or
certificates for Common Stock shall be issued. If such certificate or
certificates are to be issued to any person or persons other than the registered
holder or holders of such certificate or certificates, or if such certificate or
certificates are registered in the name or names of any person or persons other
than the person or persons signing the notice, the signatures on the notice must
be guaranteed by a participant in the Security Transfer Agents Medallion Program
or the New York Stock Exchange Medallion Signature Guarantee Program. Promptly
after receiving the aforesaid notice and certificate or certificates
representing the Series E Preferred Stock surrendered for conversion, the
Corporation shall issue and deliver to such holder of Series E Preferred Stock,
or to such holder's nominee or nominees, a certificate or certificates for the
number of shares of Common Stock issuable upon conversion of such Series E
Preferred Stock, and the certificates representing shares of Series E Preferred
Stock surrendered for conversion shall be canceled by the Corporation. If the
number of shares represented by the certificate or certificates surrendered for
conversion shall exceed the number of shares to be converted, the Corporation
shall issue and deliver to the person entitled thereto a certificate
representing the balance of any unconverted shares.
(b) Mandatory Conversion.
(i) Immediately prior to the first closing of a
Qualified Public Offering (as hereinafter defined) of the Common Stock of the
Corporation, each share of Series E Preferred Stock held by such holder shall
immediately be converted into that number of fully paid and non-assessable
shares of Common Stock as is determined by multiplying 1 by the Series E
Conversion Factor (as defined below).
(ii) A "Qualified Public Offering" is hereby defined as
a Public Offering in which the pre-money valuation of the Corporation is no less
than One Hundred Twenty-Nine Million Dollars ($129,000,000) and the aggregate
proceeds (net of any underwriter's discount) to the Corporation exceed Twenty
Million Dollars ($20,000,000).
(iii) The Corporation shall give each holder notice of
the occurrence of a Qualified Public Offering within a reasonable time of the
initial filing of a registration statement. At any time at or after the closing
of the Qualified Public Offering, the
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<PAGE> 28
Corporation shall deliver to each holder of Series E Preferred Stock such number
of shares of Common Stock into which such holder's shares are then convertible
upon surrender by such holder of certificates representing the shares of Series
E Preferred Stock held by such holder or presentation of an affidavit of loss
certificate together with an indemnity satisfactory to the Corporation.
(c) Series E Conversion Factor. The initial conversion
factor for the Series E Preferred Stock shall be 500, subject to adjustment in
accordance with the provisions of this Section 4(c). The conversion factor in
effect from time to time, as adjusted to this Section 4(c), is referred to
herein as the " Series E Conversion Factor".
(i) Each adjustment to the Series E Conversion Factor
shall be calculated to the nearest four decimal places.
(ii) In the event that: (A) the Corporation shall, at
any time, pay a dividend in, or make a distribution on its Common Stock or any
other equity securities in, shares of Common Stock; (B) the Corporation shall,
at any time, by subdivision of its shares of outstanding Common Stock, by
reclassification, stock split or otherwise, subdivide its outstanding shares of
Common Stock into a greater number of shares; (C) the Corporation shall, at any
time, combine its outstanding shares of Common Stock into a lesser number of
shares, by reclassification, reverse stock split or otherwise (for purposes of
this Section 4(c)(ii), the event described in (A), (B) and (C) above shall be
referred to as "Capital Transactions"), then the Series E Conversion Factor then
in effect shall be adjusted to a number determined by multiplying the Series E
Conversion Factor in effect immediately prior to such Capital Transaction by the
following fraction:
X
---
Y
wherein:
X = the number of shares of Common Stock outstanding
immediately after such Capital Transaction; and
Y = the number of shares of Common Stock outstanding
immediately prior to such Capital Transaction.
(iii) The " Series E Conversion Price" shall be defined
as the fraction obtained by dividing the initial Series E Stated Value per Share
by the Series E Conversion Factor in effect at the time such calculation is
made. The Series E Conversion Price shall initially be equal to $3.111 and shall
be subject to adjustment from time to time as hereinafter provided in subsection
(iv) below. Upon each adjustment of the Series E Conversion Price, the Series E
Conversion Factor shall be recalculated so that it is equal to the fraction
obtained by dividing the Series E Stated Value per share by the Series E
Conversion Price that is a result of the calculation set forth in subsection
(iv) below.
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<PAGE> 29
(iv) If the Corporation shall after the date hereof
issue or sell any Common Stock (other than Common Stock into which the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock or
the Series E Preferred Stock is convertible or Common Stock issuable upon
exercise of warrants outstanding on the date hereof or options granted or to be
granted to employees or consultants of the Corporation pursuant to any stock
option plan adopted by the Corporation and its stockholders), without
consideration or for a consideration per share less than the Series E Conversion
Price in effect immediately prior to the issuance of such Common Stock, the
Series E Conversion Price in effect immediately prior to such issuance shall
forthwith (except as provided below in Section 4(c)(v)) be reduced to that price
that is equal to the fraction obtained by dividing:
(A) an amount equal to (x) the total number of
shares of Common Stock outstanding immediately prior to such issuance or sale
multiplied by the Series E Conversion Price in effect immediately prior to such
issuance or sale, plus (y) the consideration, if any, received or deemed to be
received, by the Corporation upon such issuance or sale, by
(B) the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
The provisions of this Section 4(c)(iv) shall not apply under any of the
circumstances for which an adjustment is provided in Section 4(c)(ii) above.
(v) For the purposes of any adjustment of the Series E
Conversion Price pursuant to this Section 4, the following provisions shall be
applicable:
(A) In the case of the issuance of Common Stock
for cash, the consideration received therefor shall be deemed to be the amount
of cash paid therefor without deduction of any discounts, commissions or other
expenses allowed, paid or incurred by the Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(B) In the case of the issuance of Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash received therefor shall be deemed to be the fair value thereof as
determined by the Board of Directors of the Corporation without deduction for
any discounts, commissions or other expenses allowed, paid or incurred by the
Corporation for any underwriting or otherwise in connection with the issuance
and sale thereof.
(C) In the case of the issuance of options to
purchase or rights to subscribe for Common Stock, the issuance of any securities
by their terms convertible into or exchangeable for Common Stock or the granting
of any options to purchase or rights to subscribe for such convertible or
exchangeable securities:
(w) The aggregate number of shares of
Common Stock initially deliverable upon exercise of such options or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were granted or issued, as the case may be, and for a
consideration equal to the consideration, if any (determined in the same manner
provided in subdivisions (A) and (B) above of this Section 4(c)(v) with
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<PAGE> 30
respect to cash consideration and consideration other than cash), received by
the Corporation upon the grant or issuance of such options or rights plus the
minimum purchase price provided in such options or rights for the Common Stock
covered thereby;
(x) The aggregate number of shares of
Common Stock initially deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have been
issued at the time such securities were issued or such options were granted, and
for a consideration equal to the consideration received by the Corporation for
any such securities and related options or rights (excluding any cash received
on account of accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon the conversion or
exchange of such securities or the exercise of any related options or rights
(the consideration in each cash to be determined in the same manner as provided
in subdivision (w) above);
(y) On any change in the number of
shares of Common Stock deliverable upon exercise of such options or rights or
conversion of or exchange for such convertible or exchangeable securities, other
than a change resulting from anti-dilution provisions thereof not more favorable
to the holder thereof than those contained herein, the Series E Conversion Price
shall forthwith be readjusted to such Series E Conversion Price as would have
been obtained had the adjustment made upon the issuance of such options, rights,
securities or options or rights related to such securities not covered prior to
such change been made upon the basis of such changed terms; and
(z) On the expiration of such options
or rights, the termination of such right to convert or exchange or the
expiration of the options or rights related to such convertible or exchangeable
securities, the Series E Conversion Price shall forthwith be readjusted to such
Series E Conversion Price as would have been obtained had the readjustment been
made upon the issuance of such options, rights, securities or options or rights
related to such securities for only the number of shares of Common Stock
actually issued upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the options or rights
related to such securities.
(d) Notice of Change in Series E Conversion Factor.
Whenever the Series E Conversion Factor is adjusted as provided in Section 4(c),
the Corporation shall forthwith compute the adjusted Series E Conversion Factor
in accordance with this Section 4 and prepare a certificate signed by the
President or Chief Executive Officer and the Secretary, the Treasurer, any
Assistant Secretary or Assistant Treasurer of the Corporation setting forth the
adjusted Series E Conversion Factor, the method of calculation thereof in
reasonable detail and the facts requiring such adjustment and upon which such
adjustment is based, which certificate shall be conclusive, final and binding
evidence of the correctness of the adjustment, and shall mail a notice stating
that the Series E Conversion Factor has been adjusted, the facts requiring such
adjustment and upon which such adjustment is based and setting forth the
adjusted Series E Conversion Factor, to the holders of record of the outstanding
shares of the Series E Preferred Stock at or prior to the time the Corporation
mails an interim statement, if any, to its
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stockholders covering the fiscal quarter period during which the facts requiring
such adjustment occurred, but in any event within forty-five (45) days of the
end of such fiscal quarter period.
(e) No Fractional Shares. Notwithstanding anything herein to
the contrary, no fractional shares of Common such holder's Series E Preferred
Stock. With respect to any fraction of a share Stock shall be issued to any
holder of Series E Preferred Stock on conversion of Common Stock called for
upon any conversion after completion of the calculation of the aggregate number
of shares of Common Stock to be issued to such holder, the Corporation shall pay
to such holder an amount in cash equal to any fractional share to which such
holder would be entitled, multiplied by the current market value of a share, as
determined by the Board of Directors of the Corporation.
(f) Reservation of Common Stock. The Corporation shall at
all times reserve and keep available out of its authorized but unissued Common
Stock, solely for issuance upon conversion of shares of Series E Preferred Stock
as herein provided, such number of shares of Common Stock as shall be issuable
from time to time upon the conversion of all of the shares of Series E Preferred
Stock at the time issued and outstanding.
5. Redemption at the Option of Holder. Each holder of Series E
Preferred Stock shall have the right at any time after such holder's receipt of
the Corporation's audited financial statements for the year ending December 31,
2003, but in no event later than June 30, 2004 (such date constituting the
beginning of the Put Option Period), to require such holder's shares of Series E
Preferred Stock to be redeemed by the Corporation, in whole or in part, in
accordance with the terms and subject to the conditions of that certain Put
Option Agreement dated February 12, 1999 between the Company and the holders of
the Series E Preferred Stock and the other parties thereto.
6. Liquidation Rights.
(a) In the event of any liquidation, dissolution or winding
up (either voluntary or involuntary) of the Corporation (a "Liquidation"), the
holders of the Series E Preferred Stock shall be entitled to receive, before any
distribution or payments are made upon any Common Stock or any other security
subordinate to the Series E Preferred Stock, after payment by the Corporation of
all sums due all creditors, and pari passu with the holders of the Series B
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock
and proportionate to their relative ownership interests in the Corporation, to
be paid out of the assets of the Corporation available for distributions to its
stockholders, an amount equal to the Series E Stated Value per share for each
outstanding share of Series E Preferred Stock plus accrued and unpaid dividends.
If, upon Liquidation, the assets available for distribution to the holders of
Series E Preferred Stock shall be insufficient to pay such holders their
liquidation preference in full, then such holders shall share ratably in the
distribution of such assets in proportion to the respective sums which would
otherwise be payable upon such distribution if all sums so payable to the
holders of Series E Preferred Stock were paid in full.
(b) A recapitalization, merger or consolidation involving
the Corporation, or a sale, lease or transfer of all or substantially all of the
assets of the Corporation
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shall, at the option of the holders of a majority of the Series E Preferred
Stock, be deemed a Liquidation.
7. Notices. Any notice required herein to be given to a holder of
the Series E Preferred Stock shall be deemed to be given if deposited in the
United States mail, first class postage prepaid, and addressed to the holder of
record at such holder's address appearing on the books of the Corporation.
8. Replacement. Upon receipt of evidence of the ownership and the
loss, theft, destruction or mutilation of any certificate evidencing one or more
shares of Series E Preferred Stock, and an agreement of the holder to indemnify
reasonably satisfactory to the Corporation, the Corporation will (at its
expense) execute and deliver in replacement of such certificate a new
certificate representing the number of shares represented by such lost, stolen,
destroyed or mutilated certificate.
PART III. PROVISIONS APPLICABLE TO COMMON STOCK.
(a) After the requirements with respect to preferential
dividends upon the Preferred Stock of all classes and series thereof shall have
been met and after the Corporation shall have complied with all requirements, if
any, with respect to the setting aside of sums as a sinking fund or redemption
or purchase account for the benefit of any class or series thereof, then, and
not otherwise, the holders of Common Stock shall be entitled to receive such
dividends as may be declared from time to time by the Board of Directors.
(b) After distribution in full of the preferential amounts
to be distributed to the holders of all classes and series thereof of Preferred
Stock then outstanding in the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the Common Stock
shall be entitled to receive all the remaining assets of the Corporation
available for distribution to its stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(c) Each holder of Common Stock shall have one vote in
respect of each share of such stock held by him.
FIFTH. ELECTION OF DIRECTORS. Members of the Board of
Directors may be elected either by written ballot or by voice vote.
SIXTH. ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS. In
furtherance and not in limitation of the powers conferred by the General
Corporation Law of the State of Delaware, the Board of Directors may from time
to time make, alter or repeal the by-laws of the Corporation.
SEVENTH. COMPROMISE OR ARRANGEMENT. Whenever a compromise or
arrangement is proposed between this Corporation and its creditors or any class
of them and/or between this Corporation and its stockholders or any class of
them, any court of equitable jurisdiction within the State of Delaware may, on
the application in a summary way of this Corporation or of any creditor or
stockholder thereof or on the application of any receiver or
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receivers appointed for this Corporation under the provisions of Section 291 of
Title 8 of the Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for this Corporation under the provisions
of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors
or class of creditors, and/or of the stockholders or class of stockholders of
this Corporation, as the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing three-fourths in value of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
EIGHTH. LIABILITY OF DIRECTORS. No director of the Corporation
shall have any personal liability to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director of the Corporation,
except (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware or (iv) for
any transaction from which the director derived an improper personal benefit.
NINTH. BOOKS OF CORPORATION. The books of the Corporation may
be kept (subject to any provision contained in the General Corporation Law of
the State of Delaware) outside the State of Delaware at such place as may be
designated from time to time by the Board of Directors or the by-laws of the
Corporation.
17. The foregoing Restated Certificate of Incorporation has been
duly adopted in accordance with the provisions of Section 245 of the DGCL.
IN WITNESS WHEREOF, INTELLIGENT INFORMATION INCORPORATED has
caused this Restated Certificate of Incorporation to be executed in its name by
its Chief Executive Officer this 16th day of February, 1999.
INTELLIGENT INFORMATION INCORPORATED
By: /s/ Robert M. Unnold
------------------------------
Robert M. Unnold,
Chief Executive Officer
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EXHIBIT 3.7
AMENDED BYLAWS OF
INTELLIGENT INFORMATION INCORPORATED
ARTICLE I.
OFFICES
Section 1. Registered Office. The registered office of the above-named
corporation shall be located at 1013 Centre Road, Wilmington, Delaware 19805.
Section 2. Other Offices. The corporation may also have offices at such
other places both within and without the State of Delaware as the board of
directors may from time to time determine in the business of the corporation may
require.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place. All meetings of the stockholders for any
purpose shall be held at such time and place, either within or without the State
of Delaware, as shall be designated from time to time by the board of directors
and stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual Meeting. Annual meetings of stockholders, commencing
with the year 1998, shall be held on the first Tuesday in July if not a legal
holiday, and, if a legal holiday, then on the next business day following, at
11:00 A.M., or at such other date and time as shall be designated from time to
time by the board of directors. For the purposes of these bylaws a "business
day" shall mean any day other than a Saturday, a Sunday or a day on which
banking institutions in The City of New York, New York are authorized or
obligated by law or executive order to be closed. At the annual meeting, holders
of the corporation's voting stock, shall elect, by a plurality vote, a board of
directors and transact such other business as may properly be brought before the
meeting.
Section 3. Notice of Annual Meeting. Written notice of the annual meeting,
stating the place, date and time of the meeting, shall be given to each
stockholder entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the date of the meeting.
Section 4. List of Stockholders. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten (10) days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten (10) days.
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prior to the meeting either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 5. Special Meetings. Special meetings of the stockholders for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the chief executive officer and
shall be called by the chief executive officer or the secretary at the request
in writing of a majority of the board of directors or at the request in writing
of stockholders owning ten percent (10%) in amount of the entire capital stock
of the corporation issued and outstanding and entitled to vote. Such request
shall state the purpose or purposes of the proposed meeting.
Section 6. Notice of Special Meetings. Written notice of a special
meeting, stating the place, date and time of the meeting and the purpose or
purposes for which the meeting is called, shall be given not less than ten (10)
nor more than sixty (60) days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
Section 7. Limit on Business at Special Meetings. Business transacted at
any special meeting of stockholders shall be limited to the purposes stated in
the notice.
Section 8. Quorums. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of stockholders for the
transaction of business, except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting of the time and place of such adjourned meeting, until a quorum
shall be present by proxy or represented by proxy. At any adjourned meeting at
which a quorum shall be present or represented by proxy, any business may be
transacted which might have been transacted at the meeting as originally called.
If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. Voting at Meetings. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting power,
present in person or represented by proxy, shall decide any question brought
before such meeting, unless the question is one upon which by express statutory
provision or provision of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 10. Voting Power. Unless otherwise provided in the
certificate of incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one (1) vote in person or by proxy for each share of
the capital stock having voting power held by such stockholder, but
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<PAGE> 3
no proxy shall be voted on after three (3) years from its date, unless the proxy
provides for a longer period.
Section 11. Written Consent Without Meeting. Unless otherwise provided in
the certificate of incorporation, any action required to be taken at any annual
or special meeting of stockholders of the corporation, or any action which may
be taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III.
DIRECTORS
Section 1. General Powers. The business of the corporation shall be
managed by, or under the direction of, its board of directors which may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by statute, the certificate of incorporation or these bylaws directed or
required to be exercised or done by the stockholders.
Section 2. Election and Tenure. The number of directors which shall
constitute the whole board shall be a maximum of eight (8). Each director shall
hold office until his successor or successors are elected and shall qualify or
until his earlier resignation or removal. Directors need not be stockholders.
Section 3. Place of Meetings. The board of directors of the corporation
may hold meetings, both regular and special, either within or without the State
of Delaware.
Section 4. Annual Meetings. The first meeting of each newly elected board
of directors shall be held immediately after the annual meeting and no notice of
such meeting shall be necessary to the newly elected directorsin order to
legally constitute the meeting, provided a quorum shall be present.
Section 5. Regular Meetings. Regular meetings of the board of directors
shall be held at least bi-monthly at such time and at such place as shall from
time to time be determined by the board.
Section 6. Special Meetings. Special meetings of the board of directors
may be called by the chief executive officer on two (2) days' notice to each
director, either personally, by mail, by telegram, by telex or by facsimile
transmission; special meetings shall be called by the chief executive officer in
like manner and on like notice upon the written request of a majority of the
directors then in office on one occasion each month. Any notice may be given by
the secretary
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and need not state the purpose or purposes of the meeting unless otherwise
required by these bylaws.
Section 7. Observers. For so long as at least one director appointed by
Keystone Venture IV, L.P., is a member of the board of directors, such director
or directors may invite one or more additional individuals (collectively, the
"Observers") to attend all regular and special meetings of the board of
directors.
Section 8. Quorum and Adjournments. At all meetings of the board, a
majority of the directors shall constitute a quorum for the transaction of
business, and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum shall not be present at any meeting of the board of
directors, the directors present thereat may adjourn the meeting from time to
time without notice other than announcement at the meeting until a quorum shall
be present.
Section 9. Action by Consent. Any action required or permitted to be taken
at any meeting of the board of directors or of any committee thereof may be
taken without a meeting if all members of the board of directors or committee,
as the case may be, consent thereto in writing and the writing is filed with the
minutes of the proceedings of the board or committee.
Section 10. Meetings by Telephone or Similar Communications Equipment.
Members of the board of directors or any committee designated by the board of
directors may participate in a meeting of the board of directors or any
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation in a meeting shall constitute presence in person at the
meeting.
Section 11. Compensation. Unless otherwise restricted by the certificate
of incorporation or these bylaws, the board of directors shall have the
authority to fix the compensation of directors. The directors and the Observers
shall be paid their reasonable out-of-pocket expenses, if any, incurred in
attending any meeting of the board of directors. Directors may also be paid a
fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Section 12. Removal of Directors. Unless otherwise restricted by statute,
the certificate of incorporation or any agreement among the shareholders, any
director or the entire board of directors may be removed, with or without cause,
by the holders of a majority of shares entitled to vote at an election of
directors.
Section 13. Resignation of Directors. Any director may resign at any time
by giving written notice to the board of directors, the chief executive officer
or the secretary of the corporation. Unless otherwise specified in such notice,
a resignation shall take effect upon the
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delivery thereof to the board of directors or the designated officer. It
shall not be necessary for a resignation to be accepted before it becomes
effective.
ARTICLE IV.
COMMITTEES
Section 1. Designation. The board of directors may, by resolution passed
by a majority of the whole board, designate one (1) or more committees, each
committee to consist of one (1) or more of the directors of the corporation. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member.
Section 2. Powers. Any such committee, to the extent provided in the
resolution of the board of directors, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the board
of directors as provided in Section 151(a) of the Delaware General Corporation
Law, fix any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the corporation or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the corporation), adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution
or amending these bylaws; and, unless the resolution or the certificate of
incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock or to
adopt a certificate of ownership and merger. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the board of directors.
Section 3. Minutes and Reports. Each committee shall keep regular minutes
of its meetings and report the same to the board of directors when required.
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ARTICLE V.
NOTICES
Section 1. Form and Delivery. Whenever, under the provisions of statutes,
the certificate of incorporation or these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice but such notice may be given in writing, by mail, addressed to such
director or stockholder at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram, telex or facsimile
transmission at such director's address as it appears in the corporation's
records.
Section 2. Waiver. Whenever any notice is required to be given under the
provisions of statutes, the certificate of incorporation or these bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent to receipt of the notice.
Section 3. Attendance at Meetings as Waiver of Notice. Any stockholder who
attends a meeting of stockholders in person or is represented at that meeting by
proxy without protesting, at the commencement of the meeting, the lack of notice
to him or any director who attends a meeting of the board of directors without
protesting, at the commencement of the meeting, the lack of notice to him shall,
in each case, be conclusively deemed to have waived notice of that meeting.
ARTICLE VI.
OFFICERS
Section 1. Designation. The officers of the corporation shall be chosen by
the board of directors and shall be a chairman of the board, a president, a
chief executive officer, a treasurer and a secretary. The board of directors may
also choose one or more vice presidents and one or more assistant treasurers and
assistant secretaries. Any number of offices may be held by the same person,
unless the certificate of incorporation or these bylaws otherwise provide.
Section 2. Election. The board of directors at its annual meeting shall
choose a chairman of the board, a president, a chief executive officer, a
treasurer and a secretary and may choose such other officers as it deems
appropriate.
Section 3. Powers and Other Duties. The officers shall exercise such
powers and perform such duties as shall be determined from time to time by the
board of directors.
Section 4. Salaries. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. Term of and Removal from Office. The officers of the
corporation shall hold office until their successors are chosen and qualified.
Any officer elected or appointed by the
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board of directors may be removed at any time by the affirmative vote of a
majority of the board of directory Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
Section 6. The Chairman of the Board. The chairman of the board of the
corporation shall preside at all meetings of the stockholders and the board of
directors and shall have such powers and perform such duties as may from time to
time be assigned by the board of directors, including, without limitation,
assisting the corporation with acquisitions.
Section 7. The Chief Executive Officer. The chief executive officer of the
corporation shall have the overall responsibility for, supervision of and
control over the day-to-day management of the business and operations of the
corporation, subject to the general policy directions of the board of directors,
and shall have such other powers and perform such other duties as may from time
to time be assigned to him by the board of directors.
The chief executive officer shall, under the seal of the corporation,
execute bonds, mortgages and other contracts requiring a seal except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation.
Section 8. The President. The president shall perform such duties and have
such powers as the board of directors may from time to time prescribe.
Section 9. The Treasurer. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors. The treasurer shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings or when the board of directors so requires, an account of
all the treasurer's transactions and of the financial condition of the
corporation.
If required by the board of directors, the treasurer shall give the
corporation a bond (which shall be renewed every six (6) years) in such sum and
with such surety or sureties as shall be satisfactory to the board of directors
for the faithful performance of the duties of the treasurer's office and for the
restoration to the corporation, in case of the treasurer's death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under the treasurer's
control belonging to the corporation.
Section 10. Vice Presidents. The vice presidents, if any, shall perform
such duties and have such powers as the board of directors may from time to time
prescribe.
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Section 11. The Secretary. The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the board of directors and of the stockholders in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. The secretary shall give, or cause to be
given, notice of all meetings of the stockholders and special meetings of the
board of directors and shall perform such other duties as may be prescribed by
the board of directors or the president, under whose supervision he shall be.
The secretary shall have custody of the corporate seal of the corporation and
the secretary or an assistant secretary shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
secretary's signature or by the signature of such assistant secretary. The board
of directors may give general authority to any other officer to affix the seal
of the corporation and to attest the affixing by the secretary's signature.
Section 12. The Assistant Treasurers and Secretaries. The assistant
treasurer and assistant secretary (or, if there is more than one, the assistant
treasurers and assistant Secretaries in the order designated by the board of
directors or, if there be no such designation, then in the order of their
election) shall, in the absence of the treasurer or secretary, or in the event
of the treasurer's or secretary's inability or refusal to act, perform the
duties and exercise the powers of the treasurer or secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE VII.
CERTIFICATES FOR SHARES
Section 1. Form and Signatures. The shares of the corporation shall be
represented by a certificate or shall be uncertificated. Certificates shall be
signed by, or in the name of the corporation by, the chief executive officer or
president and the treasurer or secretary or an assistant treasurer or assistant
secretary of the corporation.
Upon the face or back of each stock certificate issued to represent any
partly paid shares, or upon the books and records of the corporation in the case
of uncertificated partly paid shares, shall be set forth the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
If the corporation shall be authorized to issue more than one (1) class of
stock or more than one (1) series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock; provided that, except as
otherwise provided in Section 202 of the Delaware General Corporation Law, in
lieu of the foregoing requirements, there may be set forth on the face or faces
of the certificate which the corporation shall issue to represent such class or
series of stock a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or
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other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.
Within a reasonable time after the issuance or transfer of uncertificated
stock, the corporation shall send to the registered owner thereof a written
notice containing the information required to be set forth or stated on
certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the Delaware
General Corporation Law or a statement that the corporation will furnish without
charge to each stockholder who so requests the powers, designations, preferences
and relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights.
Section 2. Signature on Certificates. Any or all of the signatures on a
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The board of directors may direct a new
certificate or certificates or uncertificated shares to be issued in place of
any certificate or certificates therefore issued by the corporation alleged to
have been lost, stolen or destroyed. When authorizing such issue of a new
certificate or certificates or uncertificated shares, the board of directors may
require the owner or his legal representative to give the corporation a bond in
such sum as it may direct as indemnity against the corporation with respect to
the certificate alleged to have been lost, stolen or destroyed.
Section 4. Transfers of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Upon receipt of proper transfer instruments from the
registered owner of uncertificated shares, such uncertificated shares shall be
canceled and issuance of new equivalent uncertificated shares or certificated
shares shall be made to the person entitled thereto and the transaction shall be
recorded upon the books of the corporation.
Section 5. Record Date. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, to express consent to corporate action in writing
without a meeting, to receive payment of any dividend or other distribution or
allotment of any rights, to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the board of directors may fix, in advance, a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of such meeting
nor more than sixty (60) days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the board of directors may fix a new record date for the adjourned meeting.
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Section 6. Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of shares,
and shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by statute.
ARTICLE VIII.
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the outstanding capital stock of the
corporation, subject to the provisions of the statutes or the certificate of
incorporation, may be declared by the board of directors at any regular or
special meeting of directors and dividends may be paid in cash, property or in
shares of the capital stock.
Section 2. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, for equalizing dividends,
for repairing or maintaining any property of the corporation or for such other
purpose as the directors shall think conducive to the interest of the
corporation and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 3. Annual Statement. The board of directors shall present at each
annual meeting or special meeting of the stockholders, when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
Section 4. Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 6. Corporate Seal. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed, affixed, reproduced or otherwise.
Section 7. Indemnification. The corporation shall indemnify its officers
and directors to the fullest extent permitted by the General Corporation Law of
the State of Delaware. The Corporation may indemnify employees and agents of the
corporation in accordance with Delaware law as the board of directors shall
determine in its sole discretion.
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ARTICLE IX.
AMENDMENTS
These bylaws may be altered, amended or repealed or new bylaws may be
adopted by the stockholders or by the board of directors, when such power is
conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new bylaws is contained in the
notice of such special meeting. If the power to adopt, amend or repeal bylaws is
conferred upon the board of directors by the certificate of incorporation, it
shall not divest or limit the power of the stockholders to adopt, amend or
repeal bylaws.
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EXHIBIT 4.3
INTELLIGENT INFORMATION INCORPORATED
1995 STOCK INCENTIVE PLAN
As Established Effective as of January 20, 1995
ARTICLE I
Purpose
This 1995 Stock Incentive Plan (the "Plan") is intended as an
incentive and to encourage stock ownership by officers and certain other
employees of and consultants to Intelligent Information Incorporated or its
subsidiaries (the "Company") in order to increase their proprietary interest in
the Company's continued growth and success and to encourage such employees to
remain in the employ of and such consultants to continue to render services to
the Company. Persons eligible to receive stock options ("Options"), stock
appreciation rights ("Rights") and stock bonus awards ("Stock Bonus Awards")
under the Plan ("Participants") are those officers, directors, employees and
consultants who hold positions of responsibility and whose performance, in the
judgment of the Board of Directors of the Company, can have a significant effect
upon the Company's success.
It is intended that certain Options granted under this Plan
will qualify as "incentive stock options" under Section 422 of the United States
Internal Revenue Code of 1986, as amended (the "Code") (hereinafter referred to
as "Incentive Stock Options"). The Company makes no warranty as to the
qualification of any Options as Incentive Stock Options. Those Options granted
under the Plan which do not qualify as Incentive Stock Options are hereinafter
referred to as "Non-Qualified Stock Options."
ARTICLE II
Administration
The Plan shall be administered by a committee consisting of
two or more directors (the "Committee") selected by the Board of Directors of
the Company (the "Board"). No person shall be appointed to or shall serve as a
member of such committee unless at the time of such appointment and service he
shall be a "disinterested person," as defined in Rule 16b-3 promulgated under
the United States Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Notwithstanding the foregoing, the Board may, in its discretion, reserve
to itself any or all of the authority and responsibility of the Committee with
respect to awards to
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employees who are not subject to liability under Section 16(b) of the Exchange
Act at the time any such responsibility is exercised.
Subject to the provisions of the Plan, the Board or the
Committee shall have sole authority, in its absolute discretion: (a) to
determine which of the eligible employees of the Company shall be granted
Options, Rights or Stock Bonus Awards; (b) to authorize the granting of
Incentive Stock Options, Non-Qualified Stock Options, Rights and Stock Bonus
Awards; (c) to determine the times when Options, Rights or Stock Bonus Awards
shall be granted and the number of shares to be optioned or subject to such
grant; (d) to determine the option price of the shares subject to each Option or
Right, which price shall be not less than the minimum specified in ARTICLE IV
hereof; (e) to determine the time or times when each Option, Right or Stock
Bonus Award becomes exercisable (whether in whole or in part), the duration of
the exercise period and any other restrictions on the exercise of Options or
Rights issued hereunder; (f) to prescribe the form or forms of the agreements
under the Plan (which forms shall be consistent with the terms of the Plan but
need not be identical); (g) to adopt, amend and rescind such rules and
regulations as, in its opinion, may be advisable in the administration of the
Plan; and (h) to construe and interpret the Plan, the rules and regulations and
the agreements under the Plan and to make all other determinations deemed
necessary or advisable for the administration of the Plan. All decisions,
determinations and interpretations of the Board or the Committee, as the case
may be, shall be final and binding on all Participants and their respective
successors and assigns and all persons claiming under or through them.
ARTICLE III
Stock
The stock to be issued under the Plan shall be shares of authorized but
unissued shares of the Company's Common Stock, previously issued shares of the
Company's Common Stock reacquired by the Company or both (the "Stock"). Under
the Plan, the total number of shares of Stock which may be purchased pursuant to
options or available for Stock Bonus Awards granted under the Plan or acquired
pursuant to the exercise of Rights granted under the Plan shall not exceed, in
the aggregate, One Million and Fourteen Thousand (1,014,000) shares, except as
such number of shares shall be adjusted in accordance with the provisions of
ARTICLE XI hereof.
The number of shares of Stock available for grant of Options,
Rights or Stock Bonus Awards under the Plan shall be decreased by the sum of the
number of shares with respect to which Options, Rights or Stock Bonus Awards
have been issued and are then outstanding and the number of shares issued upon
exercise of Options. Shares of Stock which are subject to Rights linked with
related Options shall be counted only once in determining whether the maximum
number of shares of Stock which may be purchased or acquired under the Plan has
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been exceeded. If any shares of Stock subject to an Option, Right or Stock Bonus
Award shall not be issued or transferred and shall cease to be issuable or
transferable because of the termination, in whole or in part, of such Option,
Right or Stock Bonus Award or for any other reason, or if any such shares shall,
after issuance or transfer, be reacquired by the Company because of a
Participant's failure to comply with the terms and conditions of a Stock Bonus
Award, or if the Company shall pay cash in lieu of issuing shares of Stock upon
settlement of an Option, Right or Stock Bonus Award, the shares not so issued or
transferred, or the shares so reacquired by the Company, as the case may be,
shall no longer be charged against the number of shares of Stock subject to the
Plan and may again be made subject to Options, Rights or Stock Bonus Awards;
provided, however, that the number of shares not so issued or transferred and
any such reacquired shares may again be made subject to Options, Rights or Stock
Bonus Awards for persons subject to liability under Section 16(b) of the
Exchange Act only if the forfeiting Participant received no benefits of
ownership such as dividends (but excluding voting rights) from the shares or if
Rule 16b-3 under the Exchange Act would, in the opinion of the Board or the
Committee, otherwise be satisfied.
ARTICLE IV
Option Price
In the case of each Non-Qualified Stock Option granted under
the Plan, the Option price shall be determined by the Board or the Committee, as
the case may be. In the case of each Incentive Stock Option granted under the
Plan, the Option price shall be not less than the fair market value of the Stock
at the time the Option was granted. The fair market value shall be deemed for
all purposes of the Plan to be the mean between the highest and lowest sale
prices reported as having occurred on any Exchange on which the Company's Common
Stock may be listed and traded on the date the Option is granted, or, if there
is no such sale on that date, then on the last preceding date on which such a
sale was reported. If the Company's Stock is not listed on any Exchange but the
Stock is quoted in the National Market System of the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") on a last sale basis,
then the fair market value of the Stock shall be deemed to be the mean between
the high and low sale price reported on the date the Option is granted, or, if
there is no such sale on that date, then on the last preceding date on which a
sale was reported. If the Stock is not quoted on NASDAQ on a last sale basis,
then the fair market value of the Stock shall be deemed to be the mean between
the highest asked and lowest bid prices for such Stock for the day on which the
Option is granted, or, if there are no transactions in the Stock on that day,
then on the last preceding date on which such transactions occurred. In all
other cases, the fair market value of the Stock shall mean the amount determined
by the Board or the Committee to be the fair market value based upon a good
faith attempt to value the Stock accurately and computed in accordance with
applicable regulations of the United States Internal Revenue Service. In no
event shall the
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Option price be less than the par value per share of Common Stock.
ARTICLE V
Exercise and Terms of Options, Rights and Stock Bonus Awards
The Board or the Committee, as the case may be, shall
determine the date or dates after which Options or Rights may be exercised or
Stock Bonus Awards become vested, in whole or in part. If an Option or Right is
exercisable or a Stock Bonus Award becomes vested in installments, installments
or portions thereof which are exercisable and not exercised shall remain
exercisable.
Any other provision of the Plan notwithstanding, no Option or
Right shall be exercisable after the date ten (10) years from the date of grant
of such Option (the "Termination Date"). If, prior to the Termination Date, a
Participant shall cease to be employed by the Company (other than by reason of
death or permanent and total disability within the meaning of Section 22(e)(3)
of the Code), the Option or Right will remain exercisable for a period not
extending beyond three (3) months after the date of cessation of employment to
the extent it was exercisable at the time of cessation of employment. If, prior
to the Termination Date, a Participant shall cease to be employed by the Company
by reason of a permanent and total disability within the meaning of Section
22(e)(3) of the Code, the Option or Right granted hereunder will remain
exercisable for a period not extending beyond one (1) year after the date of
cessation of employment to the extent it was exercisable at the time of
cessation of employment. In the event of the death of a Participant prior to the
Termination Date and while employed by the Company or while entitled to exercise
an Option or Right pursuant to the preceding sentences of this paragraph, the
Option or Right granted hereunder may provide that it will remain exercisable at
any time prior to the Termination Date, but in no event later than one (1) year
from the date of death, by the person or persons to whom the Participant's
rights under the Option or Right pass by applicable laws of descent and
distribution to the extent that the Participant was entitled to exercise it on
the date of death.
ARTICLE VI
Special Provisions Applicable to
Incentive Stock Options Only
Except as hereafter permitted by the Code, the aggregate fair
market value (determined as of the time the Option is granted) of the Stock with
respect to which any Incentive Stock Option may be exercisable for the first
time by the grantee in any calendar year (under this Plan or any other stock
option plan of the Company or any parent or subsidiary
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corporation thereof (within the meaning of Sections 424(e) and (f) of the Code))
shall not exceed One Hundred Thousand Dollars ($100,000).
No Incentive Stock Option may be granted to an individual who,
at the time the Option is granted, owns, directly or indirectly (within the
meaning of Section 424(d) of the Code), stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any parent or subsidiary corporation thereof (within the meaning of
Sections 424(e) and (f) of the Code), unless such Option (i) has an Option price
of at least one hundred ten percent (110%) of the fair market value of the Stock
on the date of the grant of such Option and (ii) such Option cannot be exercised
more than five (5) years after the date it is granted.
ARTICLE VII
Payment for Shares
Payment for shares of Stock purchased under an Option granted
hereunder shall be made in full upon exercise of the Option by certified or bank
cashier's check or, to the extent permitted by law or the applicable agreement,
(i) by the surrender or delivery to the Company of shares of its stock having a
fair market value equal to the purchase price for the Stock as to which the
Option is being exercised or (ii) by delivery of a promissory note secured by a
pledge of the Stock, provided that any such note shall mature in ten (10) years
or such lesser period as may be specified by the Board or the Committee and, in
the case of an Incentive Stock Option, any such note shall bear interest at the
minimum rate required to avoid imputation of interest under United States
federal income tax laws applicable at the time of exercise. The Stock purchased
shall thereupon be promptly delivered; provided, however, that the Company may,
in its discretion, require that a Participant pay to the Company, at the time of
exercise, such amount as the Company deems necessary to satisfy its obligation
to withhold federal, state or local income or other taxes incurred by reason of
the exercise or the transfer of shares thereupon.
ARTICLE VIII
Stock Appreciation Rights
In the discretion of the Board or the Committee, as the case
may be, a Right may be granted (i) alone, (ii) simultaneously with the grant of
an Option (either Incentive or Non-Qualified) and in conjunction therewith or in
the alternative thereto or (iii) subsequent to the grant of a Non-Qualified
Option and in conjunction therewith or in the alternative thereto.
The exercise price of a Right granted alone shall be
determined by the Board or the Committee, but shall not be less than one hundred
percent (100%) of the fair market value of
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one share of the Company's Common Stock on the date of grant of such Right.
Except as otherwise provided by the Board or the Committee and subject to
applicable law, a Right granted simultaneously with or subsequent to the grant
of an Option and in conjunction therewith or in the alternative thereto shall
have the same exercise price as the related Option, shall be transferable only
upon the same terms and conditions as the related Option and shall be
exercisable only to the same extent as the related Option; provided, however,
that, a Right, by its terms, shall be exercisable only when the fair market
value per share of Common Stock subject to the Right and related Option exceeds
the exercise price per share thereof.
Upon any exercise of a Right, the number of shares of Stock
for which any related Option shall be exercisable shall be reduced by the number
of shares of Stock for which the Right shall have been exercised. The number of
shares of Stock for which a Right shall be exercisable shall be reduced upon any
exercise of any related Option by the number of shares of Stock for which such
Option shall have been exercised.
A Right shall entitle the Participant upon exercise thereof to
receive from the Company a number of shares of Common Stock (with or without
restrictions as to substantial risk of forfeiture and transferability, as
determined by the Board or the Committee in its sole discretion), an amount of
cash or any combination of shares and cash, as determined by the Board or the
Committee in its sole discretion, having an aggregate fair market value equal to
the product of (i) the excess of the fair market value, on the date of such
exercise, of one (1) share over the exercise price per share specified in such
Right or its related Option and (ii) the number of shares for which such Right
shall be exercised; provided, however, that no fractional shares of Stock shall
be issued upon exercise of a Right.
Participants shall not be entitled to request or receive cash
in full or partial payment of a Right, if such Right or any related Option shall
have been exercised during the first six (6) months of its respective term;
provided, however, that such prohibition shall not apply if the Participant dies
or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior
to the expiration of such six-month period or if such Participant is not a
director, officer or beneficial owner of the Company who is described in Section
16(a) of the Exchange Act.
A Right shall be deemed exercised on the last day of its term,
if not otherwise exercised by the holder thereof, provided that the fair market
value of the shares subject to the Right exceeds the exercise price thereof on
such date.
For all purposes of this Article VIII, the fair market value
of shares shall be determined in accordance with Article IV.
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ARTICLE IX
Stock Bonus Awards
Stock Bonus Awards shall consist of an amount of cash or
shares of Stock, or a combination of each, distributed to a Participant or which
the Board or the Committee agrees to distribute in the future in lieu of, or as
a supplement to, any other compensation that may have been earned by services
rendered prior to the date the Stock Bonus Award is made. Stock Bonus Awards
may, but need not, be issued in the form of a (i) Performance Unit Award, which
consists of cash and/or shares of Stock that will be distributed to a
Participant in the future if continued employment or other performance
objectives specified by the Board or the Committee are attained or (ii)
Restricted Stock Award, which consists of shares of Stock issued or transferred
to a Participant and which will become free of restrictions specified by the
Board or the Committee if continued employment and/or other performance
objectives specified by the Board or the Committee are attained. The amount of a
Stock Bonus Award may, but need not, be determined by reference to the market
value of the Stock.
A Participant may be granted a Stock Bonus Award whether or
not the Participant is eligible to receive similar or dissimilar incentive
compensation under any other plan or arrangement of the Company.
Stock subject to a Stock Bonus Award may be issued or
transferred to a Participant at the time such Stock Bonus Award is granted, or
at any time subsequent thereto, or in installments from time to time, as the
Board or the Committee shall determine.
Any Stock Bonus Award may, in the discretion of the Board or
the Committee, be settled in cash, on each date on which shares would otherwise
have been delivered or become unrestricted, in an amount equal to the fair
market value on such date of the shares which would otherwise have been
delivered or become unrestricted.
Stock Bonus Awards shall be subject to such terms and
conditions, including, without limitation, restrictions on the sale or other
disposition of the shares of Stock issued or transferred pursuant to such Stock
Bonus Award, and conditions calling for forfeiture of the Stock Bonus Award or
the shares of Stock issued or transferred pursuant thereto in designated
circumstances, as the Board or the Committee shall determine; provided, however,
that upon the issuance or transfer of shares of Stock pursuant to any such Stock
Bonus Award, the recipient shall, with respect to such shares, be and become a
stockholder of the Company fully entitled to receive dividends, to vote and to
exercise all other rights of a shareholder except to the extent otherwise
provided in the Stock Bonus Award.
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ARTICLE X
Non-Transferability
No Option, Right or Stock Bonus Award shall be transferable
except by will or the laws of descent and distribution. During the lifetime of
the Participant, an Option or Right shall be exercisable only by the
Participant.
ARTICLE XI
Adjustment for Recapitalization, Merger, Etc.
The aggregate number of shares of Stock which may be purchased
pursuant to Options granted hereunder, the number of shares of Stock covered by
each outstanding Option or Right, the price per share thereof of each such
Option or Right and the number of shares subject to a Stock Bonus Award shall be
appropriately adjusted, if necessary, for any increase or decrease in the number
of outstanding shares of Common Stock resulting from a stock split or other
subdivision or consolidation of shares of Common Stock or for other capital
adjustments or payments of stock dividends or distributions or other increases
or decreases in the outstanding shares of Common Stock effected without receipt
of consideration by the Company.
Subject to any required action by the shareholders, (i) if the
Company shall be the surviving corporation in any merger or consolidation or
(ii) if the Company shall not be the surviving corporation in any merger or
consolidation but the shareholders of the Company shall hold fifty percent (50%)
or more of the surviving corporation, any Option, Right or Stock Bonus Award
granted hereunder shall cover the securities to which a holder of the number of
shares of Stock covered by the unexercised or invested portion of the Option,
Right or Stock Bonus Award would have been entitled pursuant to the terms of the
merger or consolidation.
Unless otherwise provided in the Option, Right or Stock Bonus
Award or in the foregoing paragraph, upon any merger or consolidation in which
the Company shall not be the surviving corporation, a dissolution or liquidation
of the Company or a sale of all or substantially all of its assets, all Options,
Rights and Stock Bonus Awards outstanding hereunder shall terminate; provided,
however, that the surviving corporation may grant an option or options to
purchase its shares on such terms and conditions, both as to the number of
shares and otherwise, which shall substantially preserve the rights and benefits
of any Option, Right and Stock Bonus Awards then outstanding hereunder.
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined by the Board or the Committee in its
sole discretion. Any such adjustment may provide for the elimination of any
fractional share which might otherwise become subject to an Option.
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ARTICLE XII
No Obligation to Exercise Option
Granting of an Option shall impose no obligation on the
recipient to exercise such Option.
ARTICLE XIII
Use of Proceeds
The proceeds received from the sale of Stock pursuant to the
Plan shall be used for general corporate purposes.
ARTICLE XIV
Rights as a Shareholder
A Participant or a transferee of an Option, Right or Stock
Bonus Award shall have no rights as a shareholder with respect to any share
covered by a Participant's Option, Right or Stock Bonus Award until such
Participant shall have become the holder of record of such share, and such
Participant shall not be entitled to any dividends or distributions or other
rights in respect of such share for which the record date is prior to the date
on which such Participant shall have become the holder of record thereof.
ARTICLE XV
Employment Rights
Nothing in the Plan or in any Option, Right or Stock Bonus
Award granted hereunder shall confer on any Participant who is an employee any
right to continue in the employ of the Company or to interfere in any way with
the right of the Company to terminate the Participant's employment at any time.
ARTICLE XVI
Compliance with the Law
The Company is relieved from any liability for the
non-issuance or non-transfer or any delay in issuance or transfer of any shares
of Stock subject to Options, Rights or Stock
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Bonus Awards under the Plan which results from the inability of the Company to
obtain or in any delay in obtaining from any regulatory body having jurisdiction
all requisite authority to issue or transfer shares of Stock of the Company
either upon exercise of the Options under the Plan or shares of Stock issued as
a result of such exercise or granted pursuant to a Stock Bonus Award if counsel
for the Company deems such authority necessary for lawful issuance or transfer
of any such shares. Appropriate legends may be placed on the stock certificates
evidencing shares issued upon exercise of Options, Rights or Stock Bonus Awards
to reflect such transfer restrictions.
ARTICLE XVII
Cancellation of Options or Rights
The Board or the Committee, as the case may be, in its
discretion, may, with the consent of any Participant, cancel any outstanding
Option or Right hereunder and/or reissue such Option or Right at a lower price.
ARTICLE XVIII
Adoption of Plan
This Plan shall become effective upon the date of its adoption
by the Board, subject, however, to approval by the Company's shareholders within
twelve (12) months from the date of adoption of the Plan by the Board.
ARTICLE XIX
Expiration Date of Plan
The Plan shall remain in effect until all shares authorized to
be issued or transferred hereunder have been exhausted or until the Plan is
sooner terminated by the Board of Directors, and shall continue in effect
thereafter with respect to any Options, Rights or Stock Bonus Awards outstanding
at the time of such termination. In no event shall an Incentive Stock Option be
granted under the Plan after January 19, 2005.
ARTICLE XX
Amendment or Discontinuance of Plan
The Board or the Committee may, without the consent of the
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Company's shareholders or Participants under the Plan, at any time terminate
the Plan entirely and at any time or from time to time amend or modify the Plan,
provided that no such action shall adversely affect Options or Rights
theretofore granted hereunder without the Participant's consent, and provided
further that no such action by the Board, without approval of the shareholders,
may (a) increase the total number of shares of Stock which may be purchased
pursuant to Options granted under the Plan, except as contemplated in ARTICLE
XI; (b) expand the class of employees or consultants eligible to receive
Options, Rights or Stock Bonus Awards under the Plan; (c) decrease the minimum
Option or Rights price; (d) extend the maximum term of Options or Rights granted
hereunder; (e) extend the term of the Plan; or (f) materially increase the
benefits accruing to participants under the Plan who are subject to liability
under Section 16(b) of the Exchange Act.
ARTICLE XXI
Governing Law
The Plan, such Options, Rights and Stock Bonus Awards as may
be granted thereunder and all related matters shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware
from time to time obtaining.
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EXHIBIT 4.6
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE.
THE SHARES MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND SUCH
REGISTRATION OR QUALIFICATION AS MAY BE NECESSARY UNDER THE SECURITIES LAWS OF
ANY STATE, OR AN OPINION OF COUNSEL SATISFACTORY TO INTELLIGENT INFORMATION
INCORPORATED THAT SUCH REGISTRATIONS OR QUALIFICATIONS ARE NOT REQUIRED.
No. W ____ No. of Shares Subject to Warrant: ______
Void after 5:00 p.m. _____________Time on December 31, ____.
WARRANT TO PURCHASE COMMON STOCK
OF
INTELLIGENT INFORMATION INCORPORATED
This is to certify that, for value received________________________
(the "Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from Intelligent Information Incorporated, a Delaware corporation (the
"Company"), ________________________ (_______) shares of the Common Stock,
$0.01 par value per share, of the Company (the "Common Stock"), at an exercise
price of _______ Dollars and ______ Cents ($_.__) per share at any time during
the period beginning on the date hereof and ending December 31, ____, but not
later than 5:00 p.m. __________ Time on December 31, ____. The number of shares
of Common Stock to be received upon the exercise of this Warrant and the price
to be paid for a share of Common Stock may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Shares" and the exercise price of a share of Common Stock in
effect at any time and as adjusted from time to time is hereinafter sometimes
referred to as the "Exercise Price."
1. Exercise of Warrant. Subject to the provisions of Section 7
hereof, this Warrant may be exercised in whole or in part at any time or from
time to time on or after the date hereof and until December 31, ____ or, if
either such day is a day on which banking institutions in New York are
authorized by law to close, then on the next succeeding day which shall not be
such a day, by presentation and surrender hereof to the Company at its
principal office, or at the office
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of its stock transfer agent, if any, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number of
shares specified in such form, in lawful money of the United States of America
in cash or by official bank or certified check made payable to Intelligent
Information Incorporated. If this Warrant should be exercised in part only, the
Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof to purchase
the balance of the shares purchasable thereunder. Upon receipt by the Company
of this Warrant at its office, or by the stock transfer agent of the Company at
its office, in proper form for exercise and together with payment of the
Exercise Price in the manner provided herein, the Holder shall be deemed to be
the holder of record of the shares of Common Stock issuable upon such exercise,
provided, however, that if at the date of surrender of this Warrant and payment
of such Exercise Price, the transfer books for the Common Stock shall be
closed, the certificates for the shares in respect of which this Warrant is
then exercised shall be issuable as of the date on which such books shall next
be opened and until such date the Company shall be under no duty to deliver any
certificate for such shares and the Holder shall not be deemed to have become a
holder of record of such shares.
2. Reservation of Shares. The Company hereby agrees that at all
times there shall be reserved for issuance and/or delivery upon exercise of
this Warrant such number of shares of its Common Stock as shall be required for
issuance and delivery upon exercise of this Warrant.
3. Fractional Shares. The Company shall not be required to issue
fractions of shares on the exercise of this Warrant. If any fraction of a share
would, except for the provisions of this Section, be issuable on the exercise
of this Warrant, the Company will (a) if the fraction of a share otherwise
issuable is equal to or less than one-half, round down and issue to the Holder
only the largest whole number of shares of Common Stock to which the Holder is
otherwise entitled, or (b) if the fraction of a share otherwise issuable is
greater than one-half, round-up and issue to the Holder one additional share of
Common Stock in addition to the largest whole number of shares of Common Stock
to which the holder is otherwise entitled.
4. Exchange, Transfer, Assignment or Loss of Warrant. This Warrant
is exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Company or at the office of its stock
transfer agent, if any, for other Warrants of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable hereunder. Subject to the provisions of Section 7,
upon surrender of this Warrant to the Company or at the office of its stock
transfer agent, if any, with the Assignment Form annexed hereto duly executed
and funds sufficient to pay any transfer tax, the Company shall, without
charge, execute and deliver a new Warrant in the name of the assignee named in
such instrument of assignment and this Warrant shall promptly be canceled. This
Warrant may be divided or combined with other Warrants which carry the same
rights upon presentation hereof at the office of the Company or at the office
of its stock transfer agent, if any, together with a written notice specifying
the names and denominations in which new Warrants are to be issued and signed
by the Holder hereof. The term "Warrant" as used herein includes any Warrants
into which this Warrant may be divided or exchanged. Upon
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receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of such indemnification as the Company may in its discretion
impose, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will execute and deliver a new Warrant of like tenor and date.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or
equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
6. Anti-dilution Provisions. The Exercise Price and the number and
kind of securities purchasable upon the exercise of this Warrant shall be
subject to adjustment from time to time as hereinafter provided:
(a) In the event that: (i) the Company shall, at any time,
issue shares of Common Stock as a dividend upon Common Stock or any other
equity securities in payment of a dividend thereon or as a distribution
thereon; (ii) the Company shall subdivide the number of outstanding shares of
its Common Stock into a greater number of shares or shall contract the number
of outstanding shares of its Common Stock into a lesser number of shares, by
reclassification, stock split, reverse stock split or otherwise (for purposes
of this subsection (a) of Section 6, the events described in (i) and (ii) above
shall be referred to as "Capital Transactions"), then the Exercise Price then
in effect shall be adjusted, effective at the close of business on the record
date for the determination of stockholders entitled to receive such dividend or
be subject to such Capital Transaction, to the price (computed to the nearest
cent) determined by dividing (A) the product obtained by multiplying the
Exercise Price in effect immediately prior to the close of business on such
record date by the number of shares of Common Stock outstanding prior to such
Capital Transaction, by (B) the sum of the number of shares of Common Stock
outstanding immediately after such Capital Transaction.
(b) If any capital reorganization or reclassification of the
capital stock of the Company (other than as set forth in subsection (a) of this
Section 6), or consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation
shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the holder of this Warrant shall thereafter have the
right to purchase and receive upon the basis and upon the terms and conditions
specified in this warrant and in lieu of the shares of Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the rights represented by this Warrant, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Common Stock equal to the number of shares of
such Common Stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented by this Warrant had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any
such case appropriate provision shall be made with respect to the rights and
interest of the Holder to the end that the provisions of this Warrant
(including, without limitation, provisions for adjustment of the
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Exercise Price and of the number of shares issuable upon the exercise of this
Warrant) shall thereafter be applicable as nearly as may be practicable in
relation to any shares of stock, securities, or assets thereafter deliverable
upon exercise of this Warrant. The Company shall not effect any such
consolidation, merger or sale unless prior to or simultaneously with the
consummation thereof, the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume, by written instrument, the obligation to deliver to the
Holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to purchase.
(c) Upon each adjustment of the Exercise Price pursuant to
subsection (a) of this Section 6, the number of shares of Common Stock
specified in this Warrant shall thereupon evidence the right to purchase that
number of shares of Common Stock (calculated to the nearest hundredth of a
share of Common Stock) obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
purchasable immediately prior to such adjustment upon exercise of this Warrant
and dividing the product so obtained by the Exercise Price in effect after such
adjustment.
(d) If the Company shall after the date hereof issue or sell
any Common Stock (other than Common Stock into which the Company's Series B
Preferred Stock Series C Convertible Preferred Stock, Series D Convertible
Preferred Stock or Series E Convertible Preferred Stock is convertible, or
options to purchase up to an aggregate of 1,000,000 shares of Common Stock
granted to employees or consultants of the Company, pursuant to any stock
option plan adopted by the Company and its shareholders), without consideration
or for a consideration per share less than an amount equal to the Exercise
Price in effect immediately prior to the issuance of such Common Stock, the
Exercise Price in effect immediately prior to such issuance shall forthwith
(except as provided in subsection (d)(iii) below) be reduced to that price that
is equal to the quotient obtained by dividing:
(i) an amount equal to (A) the total number of shares of
Common Stock outstanding immediately prior to such issuance or sale
multiplied by the Exercise Price in effect immediately prior to such
issuance or sale, plus (B) the consideration, if any, received or
deemed to be received, by the Company upon such issuance or sale, by
(ii) the total number of shares of Common Stock outstanding
immediately after such issuance or sale.
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provide in subsections (a) and (b) of
this Section 6.
(iii) For the purposes of any adjustment of the Exercise Price
pursuant to this Section 6, the following provisions shall be
applicable:
(A) In the case of the issuance of Common Stock for
cash, the consideration received therefor shall be deemed to be
the amount of cash paid
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therefor without deduction of any discounts, commissions or
other expenses allowed, paid or incurred by the Company for any
underwriting or otherwise in connection with the issuance and
sale thereof.
(B) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the
consideration other than cash received therefor shall be deemed
to be the fair value thereof as determined by the Board of
Directors of the Company without deduction for any discounts,
commissions or other expenses allowed, paid or incurred by the
Company for any underwriting or otherwise in connection with the
issuance and sale thereof.
(C) In the case of the issuance of options to purchase
or rights to subscribe for Common Stock, the issuance of any
securities (other than Common Stock into which the Company's
Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred is convertible) by their
terms convertible into or exchangeable for Common Stock or the
granting of any options to purchase or rights to subscribe for
such convertible or exchangeable securities:
(1) The aggregate number of shares of Common
Stock initially deliverable upon exercise of such options or
rights to subscribe for Common Stock shall be deemed to have
been issued at the time such options or rights were granted or
issued, as the case may be, and for a consideration equal to the
consideration, if any (determined in the same manner provided in
subdivisions (A) and (B) above of this subsection (d)(iii) with
respect to cash consideration and consideration other than
cash), received by the Company upon the grant or issuance of
such options or rights plus the minimum purchase price provided
in such options or rights for the Common Stock covered thereby;
(2) The aggregate number of shares of Common
Stock initially deliverable upon conversion of or in exchange
for any such convertible or exchangeable securities or upon the
exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion
or exchange thereof shall be deemed to have been issued at the
time such securities were issued or such options were granted,
and for a consideration equal to the consideration received by
the Company for any such securities and related options or
rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the additional
consideration, if any, to be received by the Company upon the
conversion or exchange of such securities or the exercise of any
related options or rights (the consideration in each case to be
determined in the same manner as provided in subdivision (1)
above);
(3) On any change in the number of shares of
Common Stock deliverable upon exercise of such options or rights
or conversion of or exchange
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for such convertible or exchangeable securities, other than a
change resulting from anti-dilution provisions thereof not more
favorable to the holder thereof than those contained herein, the
Exercise Price shall forthwith be readjusted to such Exercise
Price as would have obtained had the adjustment made upon the
issuance of such options, rights, securities or options or
rights related to such securities not covered prior to such
change been made upon the basis of such changed terms;
(4) On the expiration of such options or
rights, the termination of such right to convert or exchange or
the expiration of the options or rights related to such
convertible or exchangeable securities, the Exercise Price shall
forthwith be readjusted to such Exercise Price as would have
obtained had the readjustment been made upon the issuance of
such options, rights, securities or options or rights related to
such securities for only the number of shares of Common Stock
actually issued upon the exercise of such options or rights,
upon the conversion or exchange of such securities or upon the
exercise of the options or rights related to such securities.
(e) Irrespective of any adjustments of the number or kind of
securities issuable upon exercise of this Warrant or the Exercise Price,
Warrants theretofore or thereafter issued may continue to express the same
number of shares of Common Stock and Exercise Price as are stated in similar
Warrants previously issued.
(f) The Company may, at its sole option, retain the
independent public accounting firm regularly retained by the Company, or
another firm of independent public accountants of recognized standing selected
by the Company's Board of Directors, to make any computation required under
this Section 6 and a certificate signed by such firm shall be conclusive
evidence of any computation made under this Section 6.
(g) Whenever there is an adjustment in the Exercise Price or
in the number or kind of securities issuable upon exercise of this Warrant, or
both, as provided in this Section 6, the Company shall (i) promptly file in the
custody of its Secretary or Assistant Secretary a certificate signed by the
Chairman of the Board or the President or a Vice President of the Company and
by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Company, setting forth the facts requiring such adjustment and
the number and kind of securities issuable upon exercise of this Warrant after
such adjustment; and (ii) cause a notice stating that such adjustment has been
effected and stating the Exercise Price then in effect and the number and kind
of securities issuable upon exercise of this Warrant to be sent to the
registered holder of this Warrant.
(h) The Exercise Price and the number of shares issuable upon
exercise of this Warrant shall not be adjusted except in the manner and only
upon the occurrence of the events heretofore specifically referred to in this
Section 6.
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(i) The Board of Directors of the Company may, in its sole
discretion, (i) reduce the Exercise Price of this Warrant, (ii) increase the
number of shares of Common Stock issuable upon exercise of this Warrant and/or
(iii) provide for the issuance of other securities (in addition to the shares
of Common Stock otherwise issuable upon exercise of this Warrant) upon exercise
of this Warrant.
7. Transfer to Comply with the Securities Act of 1933 and Other
Applicable Securities Laws. This Warrant or the Warrant Shares or any other
security issued or issuable upon exercise of this Warrant may not be sold or
otherwise disposed of unless the Holder provides the Company with an opinion of
counsel satisfactory to the Company in form satisfactory to the Company that
this Warrant or the Warrant Shares may be legally transferred without violating
the Securities Act of 1933 and any other applicable securities law and then
only against receipt of an agreement of the transferee to comply with the
provisions of this Section 7 with respect to any resale or other disposition of
such securities.
INTELLIGENT INFORMATION INCORPORATED
By:
--------------------------------
Name:
Title:
[SEAL]
Attest:
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Name:
Title:
Dated:
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PURCHASE FORM
Dated _______________, 1999
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing _____________ shares of Common Stock and
hereby makes payment of ______________ in payment of the Exercise Price
thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
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Please typewrite or print in block letters)
Address:
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Signature:
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ASSIGNMENT FORM
FOR VALUE RECEIVED,
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hereby sells, assigns and transfers unto
Name:
----------------------------------------------
Please typewrite or print in block letters)
Address:
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The right to purchase Common Stock represented by this Warrant to the extent of
_____________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint _______________________ , Attorney, to
transfer the on the books of the Company with full power of substitution in the
premises.
Date
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Signature:
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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of this 1st day of January, 1999 by and between
INTELLIGENT INFORMATION INCORPORATED, a Delaware corporation with principal
executive offices at One Dock Street, Suite 500, Stamford, Connecticut 06902
("III"), and STEPHEN G. MALONEY, residing at 1766 Shippan Avenue, Stamford,
Connecticut 06902 ("Maloney").
W I T N E S S E T H :
III is desirous of employing Maloney as President and Chief
Executive Officer of III and Maloney is desirous of serving III in such
capacities, all upon the terms and subject to the conditions hereinafter
provided.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment.
III agrees to employ Maloney, and Maloney agrees to be employed by
III, upon the terms and subject to the conditions of this Agreement.
2. Term.
The employment of Maloney by III as provided in Section 1 will be
for a period of three (3) years commencing on the date hereof, unless sooner
terminated as hereinafter provided (the "Term"), and shall automatically renew
from year to year thereafter unless either party gives at least ninety (90) days
prior written notice of termination.
3. Duties; Best Efforts; Indemnification.
Maloney shall serve as President and Chief Executive Officer of III
and shall have the overall responsibility for, supervision of and control over
the day-to-day management of the business and operations of III, subject to the
general policy directions of the Board of Directors. Maloney shall also have
such other powers and perform such other duties as may from time to time be
assigned to him by the Board of Directors of III, provided that the nature of
Maloney's powers and duties so assigned shall not be inconsistent with Maloney's
positions and duties hereunder.
Maloney shall devote his business time, attention and energies to
the business and affairs of III, shall use his best efforts to advance the best
interests of III and shall not during the Term
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be actively engaged in any other business activity, whether or not such business
activity is pursued for gain, profit or other pecuniary advantage, that will
interfere with the performance by Maloney of his duties hereunder or Maloney's
availability to perform such duties or that will adversely affect, or negatively
reflect upon, III.
Subject to the provisions of III's Certificate of Incorporation and
Bylaws, each as amended from time to time, III shall indemnify Maloney to the
fullest extent permitted by the General Corporation Law of the State of
Delaware, as amended from time to time, for all amounts (including, without
limitation, judgments, fines, settlement payments, expenses and attorney's fees)
actually and reasonably incurred or paid by Maloney in connection with any
action, suit, investigation or proceeding arising out of or relating to the
performance by Maloney of services for, or the acting by Maloney as a director,
officer, or employee of, III, or any other person or enterprise at III's request
if Maloney acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of III, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. III shall use its best efforts to obtain and maintain in full force
and effect during the Term directors' and officers' liability insurance policies
providing full and adequate protection to Maloney for his capacities, provided
that the Board of Directors of III shall have no obligation to purchase such
insurance if, in its opinion, coverage is available only on unreasonable terms.
4. Place of Performance.
In connection with his employment by III, Maloney shall be based at
the principal executive offices of III, which shall be in the Stamford,
Connecticut area. If III's principal executive offices are relocated more than
fifty (50) miles from their present location without the consent of Maloney,
Maloney shall have the right prior to such relocation to terminate his
employment hereunder pursuant to Section 6(c) hereof; provided, however, that if
Maloney does not exercise such right and instead remains in the employ of III
following such relocation, III will promptly pay (or reimburse Maloney for) all
reasonable moving and moving-related expenses incurred by Maloney as a
consequence of a change of his principal residence in connection with any such
relocation of III's principal executive offices.
5. Compensation.
(a) Base Salary. III shall pay Maloney a base salary (the "Base
Salary") at a rate of not less than $150,000 per annum, payable in equal
semimonthly installments during the Term. The Board of Directors of III at least
annually will review the Base Salary and other compensation during the Term with
a view to increase thereof based upon then prevailing industry salary scales for
equivalently valued businesses for the average of the top two positions,
Maloney's performance, the performance of III, inflation and other relevant
factors.
(b) Out-of-Pocket Expenses. III shall promptly pay to Maloney the
reasonable expenses incurred by him in the performance of his duties hereunder,
including, without
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limitation, those incurred in connection with business related travel or
entertainment, or, if such expenses are paid directly by Maloney, shall promptly
reimburse him for such payment, provided that Maloney properly accounts therefor
in accordance with III's policy.
(c) Participation in Benefit Plans. During the first year of the
Term, the Board of Directors of III will enact an executive benefits plan that
includes, but is not limited to, a pension plan, profit sharing plan, stock
option plan, stock purchase plan or arrangement and health and accident plan.
Maloney shall be entitled to participate in such plan or any other employee
benefit plan or arrangement made available in the future by III to its
executives and key management employees.
(d) Life Insurance. III shall maintain a key-man life insurance
policy on the life of Maloney in the aggregate amount of at least $1,000,000,
the proceeds of which shall be payable directly to III, and an additional life
insurance policy in the aggregate of $1,000,000 (the "Repurchase Policy") which
shall be held in a trust and which proceeds shall be used for the purpose of
funding the purchase by III of the equity of III then owned by Maloney pursuant
to Section 7(a) hereof. Maloney agrees to submit to such medical examinations,
to complete such documentation and otherwise to cooperate with III as may be
required to enable III to obtain and maintain such key-man life insurance.
(e) Automobile. III shall provide Maloney with exclusive use of an
automobile for business purposes during the Term and shall pay all costs in
connection therewith. Such automobile shall be replaced periodically during the
Term, and Maloney shall have the right, at the end of the Term or at any earlier
termination thereof, to purchase the automobile he is then using at its then
depreciated book value.
(f) Vacation. Maloney shall be entitled to paid vacation days in
each calendar year determined by III from time to time, but not less than four
(4) weeks in any calendar year, prorated in any calendar year during which
Maloney is employed hereunder for less than an entire year in accordance with
the number of days in such year during which he is so employed. Maloney shall
also be entitled to all paid holidays given by III to its executives and key
management employees.
(g) Incentive Compensation. III agrees to pay Maloney a bonus (the
"Bonus"), in addition to and separate from his Base Salary and subject to the
achievement of certain mutually agreed upon performance goals, in an amount up
to thirty-five percent (35%) of his Base Salary. Maloney shall be entitled to
the Bonus on a prorata basis for partial achievement of the performance goals.
(h) Supplemental Disability Insurance. III shall maintain the
long-term disability policy currently in effect for the benefit of Maloney.
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(i) Dues and Subscriptions. III shall pay, or reimburse Maloney for,
the cost of dues and subscriptions associated with business purposes in an
amount not to exceed $5,000 annually.
6. Termination.
Maloney's employment hereunder shall be terminated upon Maloney's
death and may be terminated as follows:
(a) By III for "Cause." A termination for Cause is a termination
evidenced by a resolution adopted by a vote of a majority of the members of the
Board finding that Maloney has (i) willfully failed to comply with any of the
material terms of this Agreement, (ii) willfully and repeatedly failed to
perform his duties hereunder, (iii) engaged in gross misconduct materially
injurious to III or (iv) been convicted of, or pleaded nolo contendere to, a
felony or a crime of moral turpitude; provided, however , that Maloney shall
receive thirty (30) days' advance written notice that the Board intends to meet
to consider Maloney's termination for Cause and specifying the actions
constituting Cause, Maloney shall not have cured the actions constituting Cause
during such thirty (30) day period and Maloney shall be given a reasonable
opportunity to be heard by the Board on the issue prior to the Board's vote on
the matter.
(b) By III due to Maloney's "Disability." For purposes of this
Agreement, a termination for Disability shall occur (i) upon the thirtieth
(30th) day after the Board has provided a written termination notice to Maloney
supported by a written statement from a reputable independent physician to the
effect that Maloney shall have become so incapacitated as to be unable to
resume, within the ensuing twelve (12) months, his employment hereunder by
reason of physical or mental illness or injury, or (ii) upon rendering of a
written termination notice by the Board after Maloney has been unable to
substantially perform his duties hereunder for six (6) consecutive months or for
nine (9) months in any twelve (12) month period (exclusive of any vacation
permitted under Section 5(e) hereof) by reason of any physical or mental
illness. For purposes of this Section 6(b), Maloney agrees to make himself
available and to cooperate in any reasonable examination by a reputable
independent physician retained by III.
(c) By Maloney for "Good Reason." For purposes of this Agreement,
Good Reason shall mean (i) any circumstance that has the effect of significantly
reducing Maloney's duties or authority provided for or contemplated herein (a
"Material Change"), (ii) a breach by III of its material obligations under this
Agreement (a "Material Breach"), (iii) the relocation of the principal executive
offices of III in excess of fifty (50) miles from their present location not
consented to by Maloney, (iv) the acquisition by any person (as such term is
defined in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended), directly or indirectly, of securities of III representing fifty
percent (50%) or more of the combined voting power of III's then outstanding
securities in a transaction to which Maloney does not consent or (v) the future
disposition by III (whether direct or indirect, by sale of assets or stock,
merger, consolidation or otherwise) of all or substantially all of its business
and/or assets in a transaction to which Maloney does not consent; provided,
however, that a Material Change or a Material Breach shall constitute Good
Reason only if Maloney has notified the Board in writing of the existence and
particulars of such Material Change or Material Breach and the Board has failed
to remedy such Material Change or Material Breach within thirty (30) days of
such notice.
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7. Compensation upon Termination.
(a) In the event of the termination of Maloney's employment as a
result of Maloney's death, III shall (i) pay to Maloney's estate his Base Salary
and Bonus through the date of his death and (ii) for the longer of eighteen (18)
months following his death or the balance of the Term (as if such termination
had not occurred) provide continuation coverage to the members of Maloney's
family under all major medical and other health, accident, life or other
disability plans and programs in which such family members participated
immediately prior to his death. In the event of Maloney's death, upon the
request of his estate or beneficiaries with six (6) months of such death, III
will be required to buy the equity of III owned by Maloney to the extent that
the proceeds of the Repurchase Policy are sufficient to purchase such equity at
its fair market value (as determined below). In the event that the proceeds of
the Repurchase Policy exceed the amount necessary to purchase all of the equity
of Maloney, the excess shall be paid directly to Maloney's estate in cash. The
fair market value of Maloney's equity shall be established in good faith by the
Board of Directors as soon as practicable after the date hereof and shall be
reviewed by the Board thereafter on an annual basis. If Maloney's estate or
beneficiaries do not exercise their rights hereunder, the proceeds of the
Repurchase Policy shall be payable directly to III.
(b) In the event of the termination of Maloney's employment by III
for Cause or by Maloney other than for Good Reason, III shall pay to Maloney his
Base Salary and accrued Bonus through the date of his termination, and Maloney
shall have no further entitlement to any other compensation or benefits from
III.
(c) In the event of the termination of Maloney's employment by III
due to Disability, III shall pay to Maloney his Base Salary and accrued Bonus
through the date of his termination. In addition, for eighteen (18) months
following any such termination, III shall (i) continue to pay Maloney the Base
Salary in effect at the time of such termination less the amount, if any, then
payable to Maloney under any disability benefits of III and (ii) provide Maloney
continuation coverage under all major medical and other health, accident, life
or other disability plans and programs in which Maloney participated immediately
prior to such termination.
(d) In the event that Maloney's employment is terminated by III
other than (i) as a result of Maloney's death or (ii) for reasons specified in
Section 6(b) or (c) or by Maloney for Good Reason, III shall continue to pay to
Maloney his Base Salary and Bonus for the greater of (x) eighteen (18) months
following any such termination or (y) the balance of the Term (as if such
termination had not occurred) and provide Maloney continuation coverage under
all major medical and other health, accident, life or other disability plans or
programs in which Maloney participated immediately prior to such termination for
the same period. Notwithstanding the foregoing, the amounts otherwise payable to
Maloney pursuant to this Section 7(d) shall be subject to reduction (but not
below zero) to the extent determined necessary by III to prevent any payments or
benefits to or for the benefit of Maloney (whether pursuant to this Agreement or
any
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other plan, arrangement or agreement) from being treated as a "parachute
payment" under Section 280G of the Internal Revenue Code of 1986, as amended.
(e) If Maloney disputes the termination of his employment by III
pursuant to Section 6(a) or 6(b) herein and such dispute results in a final
determination to the effect that III did not have a proper basis for such
termination, III shall promptly pay to Maloney all payments Maloney would have
been entitled to receive had his employment hereunder had not been improperly
terminated; provided, however, that any payments or benefits under this Section
7(e) shall be reduced by the amount of any payments or benefits provided under
any other provision of Section 7 hereof.
(f) The continuation coverage under any major medical and other
health, accident, life or other disability plans and programs for the periods
provided in Section 7(a), 7(c) and 7(d) shall be provided (i) at the expense of
III and (ii) in satisfaction of III's obligation under Section 4980B of the
Internal Revenue Code (and any similar state law) with respect to the period of
time such benefits are continued hereunder.
(g) This Section 7 sets forth the only obligations of III with
respect to the termination of Maloney's employment with III, and Maloney
acknowledges that, upon the termination of his employment, he shall not be
entitled to any payments or benefits which are not explicitly provided herein.
8. Covenant Regarding Inventions and Copyrights.
Maloney shall disclose promptly to III any and all inventions,
discoveries, improvements and patentable or copyrightable works initiated,
conceived or made by him, either alone or in conjunction with others, during the
Term and related to the business or activities of III and he assigns all of his
interest therein to III or its nominee; whenever requested to do so by III,
Maloney shall execute any and all applications, assignments or other instruments
which III shall deem necessary to apply for and obtain letters patent or
copyrights of the United States or any foreign country, or otherwise protect
III's interest therein. These obligations shall continue beyond the conclusion
of the Term with respect to inventions, discoveries, improvements or
copyrightable works initiated, conceived or made by Maloney during the Term and
shall be binding upon Maloney's assigns, executors, administrators and other
legal representatives.
9. Protection of Confidential Information.
Maloney acknowledges that he has been and will be provided with
information about, and his employment by III will, throughout the Term, bring
him into close contact with, many confidential affairs of III and its
subsidiaries, including proprietary information about costs, profits, markets,
sales, products, key personnel, pricing policies, operational methods, technical
processes and other business affairs and methods, plans for future developments
and other information not readily available to the public, all of which are
highly confidential and
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proprietary and all of which were developed by III at great effort and expense.
Maloney further acknowledges that the services to be performed by him under this
Agreement are of a special, unique, unusual, extraordinary and intellectual
character, that the business of III will be conducted throughout the world (the
"Territory"), that its services will be marketed throughout the Territory, that
III competes and will compete in all of its business activities with other
organizations which are located in any part of the Territory and that the nature
of the relationship of Maloney with III is such that Maloney is capable of
competing with III from nearly any location in the Territory. In recognition of
the foregoing, Maloney covenants and agrees during the Term and for a period of
five (5) years thereafter:
(i) That he will keep secret all confidential matters of III and
not disclose them to anyone outside of III, either during or after the Term,
except with III's prior written consent or, if during the Term, in the
performance of his duties hereunder, Maloney makes a good faith determination
that it is the best interest of III and to disclose such matters;
(ii) That he will not make use of any such confidential matters for
his own purposes or the benefit of anyone other than III; and
(iii) That he will deliver promptly to III on termination of this
Agreement, or at any time III may so request, all confidential memoranda, notes,
records, reports and other confidential documents (and all copies thereof)
relating to the business of III, which he may then possess or have under his
control.
10. Restriction on Competition, Interference and Solicitation.
In recognition of the considerations described in Section 9 hereof,
Maloney covenants and agrees that, during the Term and for a period of one (1)
year or such longer period of time during which Maloney is continuing to receive
compensation from the Company after such termination, Maloney will not, directly
or indirectly, (A) enter into the employ of, or render any services to, any
person, firm or corporation engaged in any business directly competitive with
the business of III in any part of the Territory in which III is actively
engaged in business on the date of termination; (B) engage in any such business
for his own account; (C) become interested in any such business as an
individual, partner, shareholder, creditor, director, officer, principal, agent,
employee, trustee, consultant, advisor, franchisee or in any other relationship
or capacity; or (D) interfere with III's relationship with, or endeavor to
employ or entice away from III any person, firm, corporation, governmental
entity or other business organization who or which is or was an employee,
customer or supplier of, or maintained a business relationship with, III at any
time (whether before or after the Term), or which III has solicited or prepared
to solicit; provided, however, that the provisions of clause (A) shall not be
deemed to preclude Maloney from engagement by a corporation some of the
activities of which are competitive with the business of III if Maloney's
engagement does not relate, directly or indirectly, to such competitive
business, and nothing contained in this Section 10 shall be deemed to prohibit
Maloney from acquiring or holding, solely for investment, publicly traded
securities of any
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corporation some of the activities of which are competitive with the business of
III so long as such securities do not, in the aggregate, constitute more than
five percent (5%) of any class or series of outstanding securities of such
corporation.
11. Specific Remedies.
For purposes of Sections 8, 9 and 10 of this Agreement, references
to III shall include all current and future majority-owned subsidiaries of III
and all current and future joint ventures in which III may from time to time be
involved. It is understood by Maloney and III that the covenants contained in
this Section 11 and in Sections 8, 9 and 10 hereof are essential elements of
this Agreement and that, but for the agreement of Maloney to comply with such
covenants, III would not have agreed to enter into this Agreement. III and
Maloney have independently consulted with their respective counsel and have been
advised concerning the reasonableness and propriety of such covenants with
specific regard to the nature of the business conducted by III and all interests
of III. Maloney agrees that the covenants of Sections 8, 9 or 10 hereof are
reasonable and valid. If Maloney commits a breach of any of the provisions of
Sections 8, 9 or 10 hereof, such breach shall be deemed to be grounds for
termination for Cause. In addition, Maloney acknowledges that III may have no
adequate remedy at law if he violates any of the terms hereof. Maloney therefore
understands and agrees that III shall have (i) the right to have such provisions
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach will cause irreparable injury to
III and that money damages will not provide an adequate remedy to III, and (ii)
the right to require Maloney to account for and pay over to III all
compensation, profits, monies, accruals, increments and other benefits
(collectively "Benefits") derived or received by Maloney as a result of any
transaction constituting a breach of any of the provisions of Sections 8, 9 or
10 and Maloney hereby agrees to account for and pay over such Benefits to III.
12. Independence, Severability and Non-Exclusivity.
Each of the rights enumerated in Sections 8, 9 or 10 hereof and the
remedies enumerated in Section 11 hereof shall be independent of the others and
shall be in addition to and not in lieu of any other rights and remedies
available to III at law or in equity. If any of the covenants contained in
Sections 8, 9 or 10, or any part of any of them, is hereafter construed or
adjudicated to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants or right or remedies which shall be given
full effect without regard to the invalid portions. The parties intend to and do
hereby confer jurisdiction to enforce the covenants contained in Section 8, 9 or
10 and the remedies enumerated in Section 11 upon the federal and state courts
of Connecticut sitting in Fairfield County. If any of the covenants contained in
Sections 8, 9 or 10 is held to be invalid or unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall be the power to reduce the duration
and/or area of such provision and in its reduced from said provision shall then
be enforceable. No such holding of invalidity or unenforceability in one
jurisdiction shall bar on in any way affect III's right to the relief provided
in Section 11 or
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otherwise in the courts of any other state or jurisdiction within the
geographical scope of such covenants as to breaches of such covenants in such
other respective states or jurisdictions, such covenants being, for this
purpose, severable into diverse and independent covenants.
13. Disputes. If III or Maloney shall dispute any termination of
Maloney's employment hereunder or if a dispute concerning any payment hereunder
shall exist:
(a) either party shall have the right (but not the obligation), in
addition to all other rights and remedies provided by law, to compel binding,
enforceable and non-appealable arbitration of the dispute in the City of New
York under the rules of the American Arbitration Association by giving written
notice of arbitration to the other party within thirty (30) days after notice of
such dispute has been received by the party to whom notice has been given; and
(b) if such dispute (whether or not submitted to arbitration
pursuant to Section 13(a) hereof) results in a determination that (i) III did
not have the right to terminate Maloney's employment under the provisions of
this Agreement or (ii) the position taken by Maloney concerning payments to
Maloney is correct, III shall promptly pay, or if theretofore paid by Maloney,
shall promptly reimburse Maloney for, all costs and expenses (including
reasonable attorneys' fees) reasonably incurred by Maloney in connection with
such dispute.
14. Successors; Binding Agreement.
In the event of a future disposition by III (whether direct or
indirect), by sale of assets or stock, merger, consolidation or otherwise of all
or substantially all of its business and/or assets in a transaction to which
Maloney consents, III will require any successor, by agreement in form and
substance satisfactory to Maloney, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that III would be required
to perform if no such disposition had taken place.
This Agreement and all rights of Maloney hereunder shall inure to
the benefit of, and be enforceable by, Maloney's personal or legal
representatives, executors, administrators, administrators cta, successors,
heirs, distributees, devisees and legatees. If Maloney should die while any
amount would still be payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Maloney's estate.
15. Notices.
All notices, consents and other communications required or permitted
to be given by any party hereunder shall be in writing (including telecopy or
other similar writing) and shall be given be personal delivery, certified or
registered mail, postage prepaid, or telecopy (or other similar writing) as
follows:
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To III: One Dock Street
Suite 500
Stamford, CT 06902
Attn: Chairman of the Board
Telecopy: (203) 326-7672
With a copy to: Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020
Attn: Michael Hirschberg, Esq.
Telecopy: (212) 835-6001
To Maloney: 1766 Shippan Avenue
Stamford, CT 06902
or at such other address or telecopy number (or other similar number) as either
party may from time to time specify to the other. Any notice, consent or other
communication required or permitted to be given hereunder shall have been deemed
to be given on the date of mailing, personal delivery or telecopy or other
similar means (provided the appropriate answer back is received) thereof and
shall be conclusively presumed to have been received on the second business day
following the date of mailing or, in the case of personal delivery or telecopy
or other similar means, the day of delivery thereof, except that a change of
address shall not be effective until actually received.
16. Modifications and Waivers.
No term, provision or condition of this Agreement may be modified or
discharged unless such modification or discharge is authorized by the Board of
Directors of III and is agreed to in writing and signed by Maloney. No waiver by
either party hereto of any breach by the other party hereto of any term,
provision or condition of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
17. Entire Agreement.
This Agreement constitutes the entire understanding between the
parties hereto relating to the subject matter hereof, superseding all
negotiations, prior discussions, preliminary agreements and agreements relating
to the subject matter hereof made prior to the date hereof.
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18. Law Governing.
Except as otherwise explicitly noted, this Agreement shall be
governed by and construed in accordance with the laws of the State of
Connecticut (without giving effect to the principles of conflicts of law).
19. Invalidity.
Except as otherwise specified herein, the invalidity or
unenforceability of any term or terms of this Agreement shall not invalidate,
make unenforceable or otherwise affect any other term of this Agreement which
shall remain in full force and effect.
20. Headings.
The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year set forth above.
INTELLIGENT INFORMATION INCORPORATED
By: /s/ Robert M. Unnold
---------------------
Robert M. Unnold
Chairman of the Board
/s/ Stephen G. Maloney
----------------------
Stephen G. Maloney
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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of this 1st day of January, 1999 by and between
INTELLIGENT INFORMATION INCORPORATED, a Delaware corporation with principal
executive offices at One Dock Street, Suite 500, Stamford, Connecticut 06902
("III"), and ROBERT M. UNNOLD, residing at 52 Lanark Road, Stamford, Connecticut
06902 ("Unnold").
W I T N E S S E T H :
III is desirous of employing Unnold as Chairman of the Board of
Directors of III and Unnold is desirous of serving III in such capacity, all
upon the terms and subject to the conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment.
III agrees to employ Unnold, and Unnold agrees to be employed by
III, upon the terms and subject to the conditions of this Agreement.
2. Term.
The employment of Unnold by III as provided in Section 1 will be for
a period of three (3) years commencing on the date hereof, unless sooner
terminated as hereinafter provided (the "Term"), and shall automatically renew
from year to year thereafter unless either party gives at least ninety (90) days
prior written notice of termination.
3. Duties; Best Efforts; Indemnification.
Unnold shall serve as Chairman of the Board of Directors of III and
shall preside at all meetings of the stockholders and the Board of Directors of
III. Unnold shall also have such other powers and perform such other duties as
may from time to time be assigned by the Board of Directors of III, including,
without limitation, assisting III with acquisitions, provided, however, that the
nature of Unnold's powers and duties so assigned shall not be inconsistent with
Unnold's position and duties hereunder.
Unnold shall devote his business time, attention and energies to the
business and affairs of III, shall use his best efforts to advance the best
interests of III and shall not during the Term
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be actively engaged in any other business activity, whether or not such business
activity is pursued for gain, profit or other pecuniary advantage, that will
interfere with the performance by Unnold of his duties hereunder or Unnold's
availability to perform such duties or that will adversely affect, or negatively
reflect upon, III.
Subject to the provisions of III's Certificate of Incorporation and
Bylaws, each as amended from time to time, III shall indemnify Unnold to the
fullest extent permitted by the General Corporation Law of the State of
Delaware, as amended from time to time, for all amounts (including, without
limitation, judgments, fines, settlement payments, expenses and attorney's fees)
actually and reasonably incurred or paid by Unnold in connection with any
action, suit, investigation or proceeding arising out of or relating to the
performance by Unnold of services for, or the acting by Unnold as a director,
officer, or employee of, III, or any other person or enterprise at III's request
if Unnold acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of III, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. III shall use its best efforts to obtain and maintain in full force
and effect during the Term directors' and officers' liability insurance policies
providing full and adequate protection to Unnold for his capacities, provided
that the Board of Directors of III shall have no obligation to purchase such
insurance if, in its opinion, coverage is available only on unreasonable terms.
4. Place of Performance.
In connection with his employment by III, Unnold shall be based at
the principal executive offices of III, which shall be in the Stamford,
Connecticut area. If III's principal executive offices are relocated more than
fifty (50) miles from their present location without the consent of Unnold,
Unnold shall have the right prior to such relocation to terminate his employment
hereunder pursuant to Section 6(c) hereof; provided, however, that if Unnold
does not exercise such right and instead remains in the employ of III following
such relocation, III will promptly pay (or reimburse Unnold for) all reasonable
moving and moving-related expenses incurred by Unnold as a consequence of a
change of his principal residence in connection with any such relocation of
III's principal executive offices.
5. Compensation.
(a) Base Salary. III shall pay Unnold a base salary (the "Base
Salary") at a rate of not less than $150,000 per annum, payable in equal
semimonthly installments during the Term. The Board of Directors of III at least
annually will review the Base Salary and other compensation during the Term with
a view to increase thereof based upon then prevailing industry salary scales for
equivalently valued businesses for the average of the top two positions,
Unnold's performance, the performance of III, inflation and other relevant
factors.
(b) Out-of-Pocket Expenses. III shall promptly pay to Unnold the
reasonable expenses incurred by him in the performance of his duties hereunder,
including, without
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limitation, those incurred in connection with business related travel or
entertainment, or, if such expenses are paid directly by Unnold, shall promptly
reimburse him for such payment, provided that Unnold properly accounts therefor
in accordance with III's policy.
(c) Participation in Benefit Plans. During the first year of the
Term, the Board of Directors of III will enact an executive benefits plan that
includes, but is not limited to, a pension plan, profit sharing plan, stock
option plan, stock purchase plan or arrangement and health and accident plan.
Unnold shall be entitled to participate in such plan or any other employee
benefit plan or arrangement made available in the future by III to its
executives and key management employees.
(d) Life Insurance. III shall maintain a key-man life insurance
policy on the life of Unnold in the aggregate amount of at least $1,000,000, the
proceeds of which shall be payable directly to III, and an additional life
insurance policy in the aggregate of $1,000,000 (the "Repurchase Policy") which
shall be held in a trust and which proceeds shall be used for the purpose of
funding the purchase by III of the equity of III then owned by Unnold pursuant
to Section 7(a) hereof. Unnold agrees to submit to such medical examinations, to
complete such documentation and otherwise to cooperate with III as may be
required to enable III to obtain and maintain such key-man life insurance.
(e) Automobile. III shall provide Unnold with exclusive use of an
automobile for business purposes during the Term and shall pay all costs in
connection therewith. Such automobile shall be replaced periodically during the
Term, and Unnold shall have the right, at the end of the Term or at any earlier
termination thereof, to purchase the automobile he is then using at its then
depreciated book value.
(f) Vacation. Unnold shall be entitled to paid vacation days in each
calendar year determined by III from time to time, but not less than four (4)
weeks in any calendar year, prorated in any calendar year during which Unnold is
employed hereunder for less than an entire year in accordance with the number of
days in such year during which he is so employed. Unnold shall also be entitled
to all paid holidays given by III to its executives and key management
employees.
(g) Incentive Compensation. III agrees to pay Unnold a bonus (the
"Bonus"), in addition to and separate from his Base Salary and subject to the
achievement of certain mutually agreed upon performance goals, in an amount up
to thirty-five percent (35%) of his Base Salary. Unnold shall be entitled to the
Bonus on a prorata basis for partial achievement of the performance goals.
(h) Supplemental Disability Insurance. III shall maintain the
long-term disability policy currently in effect for the benefit of Unnold.
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(i) Dues and Subscriptions. III shall pay, or reimburse Unnold for,
the cost of dues and subscriptions associated with business purposes in an
amount not to exceed $5,000 annually.
6. Termination.
Unnold's employment hereunder shall be terminated upon Unnold's
death and may be terminated as follows:
(a) By III for "Cause." A termination for Cause is a termination
evidenced by a resolution adopted by a vote of a majority of the members of the
Board finding that Unnold has (i) willfully failed to comply with any of the
material terms of this Agreement, (ii) willfully and repeatedly failed to
perform his duties hereunder, (iii) engaged in gross misconduct materially
injurious to III or (iv) been convicted of, or pleaded nolo contendere to, a
felony or a crime of moral turpitude; provided, however , that Unnold shall
receive thirty (30) days' advance written notice that the Board intends to meet
to consider Unnold's termination for Cause and specifying the actions
constituting Cause, Unnold shall not have cured the actions constituting Cause
during such thirty (30) day period and Unnold shall be given a reasonable
opportunity to be heard by the Board on the issue prior to the Board's vote on
the matter.
(b) By III due to Unnold's "Disability." For purposes of this
Agreement, a termination for Disability shall occur (i) upon the thirtieth
(30th) day after the Board has provided a written termination notice to Unnold
supported by a written statement from a reputable independent physician to the
effect that Unnold shall have become so incapacitated as to be unable to resume,
within the ensuing twelve (12) months, his employment hereunder by reason of
physical or mental illness or injury, or (ii) upon rendering of a written
termination notice by the Board after Unnold has been unable to substantially
perform his duties hereunder for six (6) consecutive months or for nine (9)
months in any twelve (12) month period (exclusive of any vacation permitted
under Section 5(e) hereof) by reason of any physical or mental illness. For
purposes of this Section 6(b), Unnold agrees to make himself available and to
cooperate in any reasonable examination by a reputable independent physician
retained by III.
(c) By Unnold for "Good Reason." For purposes of this Agreement,
Good Reason shall mean (i) any circumstance that has the effect of significantly
reducing Unnold's duties or authority provided for or contemplated herein (a
"Material Change"), (ii) a breach by III of its material obligations under this
Agreement (a "Material Breach"), (iii) the relocation of the principal executive
offices of III in excess of fifty (50) miles from their present location not
consented to by Unnold, (iv) the acquisition by any person (as such term is
defined in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended), directly or indirectly, of securities of III representing fifty
percent (50%) or more of the combined voting power of III's then outstanding
securities in a transaction to which Unnold does not consent or (v) the future
disposition by III (whether direct or indirect, by sale of assets or stock,
merger, consolidation or otherwise) of all or substantially all of its business
and/or assets in a transaction to which Unnold does not consent; provided,
however, that a Material Change or a Material Breach shall
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constitute Good Reason only if Unnold has notified the Board in writing of the
existence and particulars of such Material Change or Material Breach and the
Board has failed to remedy such Material Change or Material Breach within thirty
(30) days of such notice.
7. Compensation upon Termination.
(a) In the event of the termination of Unnold's employment as a
result of Unnold's death, III shall (i) pay to Unnold's estate his Base Salary
and Bonus through the date of his death and (ii) for the longer of eighteen (18)
months following his death or the balance of the Term (as if such termination
had not occurred) provide continuation coverage to the members of Unnold's
family under all major medical and other health, accident, life or other
disability plans and programs in which such family members participated
immediately prior to his death. In the event of Unnold's death, upon the request
of his estate or beneficiaries with six (6) months of such death, III will be
required to buy the equity of III owned by Unnold to the extent that the
proceeds of the Repurchase Policy are sufficient to purchase such equity at its
fair market value (as determined below). In the event that the proceeds of the
Repurchase Policy exceed the amount necessary to purchase all of the equity of
Unnold, the excess shall be paid directly to Unnold's estate in cash. The fair
market value of Unnold's equity shall be established in good faith by the Board
of Directors as soon as practicable after the date hereof and shall be reviewed
by the Board thereafter on an annual basis. If Unnold's estate or beneficiaries
do not exercise their rights hereunder, the proceeds of the Repurchase Policy
shall be payable directly to III.
(b) In the event of the termination of Unnold's employment by III
for Cause or by Unnold other than for Good Reason, III shall pay to Unnold his
Base Salary and accrued Bonus through the date of his termination, and Unnold
shall have no further entitlement to any other compensation or benefits from
III.
(c) In the event of the termination of Unnold's employment by III
due to Disability, III shall pay to Unnold his Base Salary and accrued Bonus
through the date of his termination. In addition, for eighteen (18) months
following any such termination, III shall (i) continue to pay Unnold the Base
Salary in effect at the time of such termination less the amount, if any, then
payable to Unnold under any disability benefits of III and (ii) provide Unnold
continuation coverage under all major medical and other health, accident, life
or other disability plans and programs in which Unnold participated immediately
prior to such termination.
(d) In the event that Unnold's employment is terminated by III other
than (i) as a result of Unnold's death or (ii) for reasons specified in Section
6(b) or (c) or by Unnold for Good Reason, III shall continue to pay to Unnold
his Base Salary and Bonus for the greater of (x) eighteen (18) months following
any such termination or (y) the balance of the Term (as if such termination had
not occurred) and provide Unnold continuation coverage under all major medical
and other health, accident, life or other disability plans or programs in which
Unnold participated immediately prior to such termination for the same period.
Notwithstanding the foregoing, the amounts otherwise payable to Unnold pursuant
to this Section 7(d) shall be subject to reduction
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(but not below zero) to the extent determined necessary by III to prevent any
payments or benefits to or for the benefit of Unnold (whether pursuant to this
Agreement or any other plan, arrangement or agreement) from being treated as a
"parachute payment" under Section 280G of the Internal Revenue Code of 1986, as
amended.
(e) If Unnold disputes the termination of his employment by III
pursuant to Section 6(a) or 6(b) herein and such dispute results in a final
determination to the effect that III did not have a proper basis for such
termination, III shall promptly pay to Unnold all payments Unnold would have
been entitled to receive had his employment hereunder had not been improperly
terminated; provided, however, that any payments or benefits under this Section
7(e) shall be reduced by the amount of any payments or benefits provided under
any other provision of Section 7 hereof.
(f) The continuation coverage under any major medical and other
health, accident, life or other disability plans and programs for the periods
provided in Section 7(a), 7(c) and 7(d) shall be provided (i) at the expense of
III and (ii) in satisfaction of III's obligation under Section 4980B of the
Internal Revenue Code (and any similar state law) with respect to the period of
time such benefits are continued hereunder.
(g) This Section 7 sets forth the only obligations of III with
respect to the termination of Unnold's employment with III, and Unnold
acknowledges that, upon the termination of his employment, he shall not be
entitled to any payments or benefits which are not explicitly provided herein.
8. Covenant Regarding Inventions and Copyrights.
Unnold shall disclose promptly to III any and all inventions,
discoveries, improvements and patentable or copyrightable works initiated,
conceived or made by him, either alone or in conjunction with others, during the
Term and related to the business or activities of III and he assigns all of his
interest therein to III or its nominee; whenever requested to do so by III,
Unnold shall execute any and all applications, assignments or other instruments
which III shall deem necessary to apply for and obtain letters patent or
copyrights of the United States or any foreign country, or otherwise protect
III's interest therein. These obligations shall continue beyond the conclusion
of the Term with respect to inventions, discoveries, improvements or
copyrightable works initiated, conceived or made by Unnold during the Term and
shall be binding upon Unnold's assigns, executors, administrators and other
legal representatives.
9. Protection of Confidential Information.
Unnold acknowledges that he has been and will be provided with
information about, and his employment by III will, throughout the Term, bring
him into close contact with, many confidential affairs of III and its
subsidiaries, including proprietary information about costs, profits, markets,
sales, products, key personnel, pricing policies, operational methods, technical
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<PAGE> 7
processes and other business affairs and methods, plans for future developments
and other information not readily available to the public, all of which are
highly confidential and proprietary and all of which were developed by III at
great effort and expense. Unnold further acknowledges that the services to be
performed by him under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character, that the business of III will be
conducted throughout the world (the "Territory"), that its services will be
marketed throughout the Territory, that III competes and will compete in all of
its business activities with other organizations which are located in any part
of the Territory and that the nature of the relationship of Unnold with III is
such that Unnold is capable of competing with III from nearly any location in
the Territory. In recognition of the foregoing, Unnold covenants and agrees
during the Term and for a period of five (5) years thereafter:
(i) That he will keep secret all confidential matters of III and
not disclose them to anyone outside of III, either during or after the Term,
except with III's prior written consent or, if during the Term, in the
performance of his duties hereunder, Unnold makes a good faith determination
that it is the best interest of III and to disclose such matters;
(ii) That he will not make use of any such confidential matters for
his own purposes or the benefit of anyone other than III; and
(iii) That he will deliver promptly to III on termination of this
Agreement, or at any time III may so request, all confidential memoranda, notes,
records, reports and other confidential documents (and all copies thereof)
relating to the business of III, which he may then possess or have under his
control.
10. Restriction on Competition, Interference and Solicitation.
In recognition of the considerations described in Section 9 hereof,
Unnold covenants and agrees that, during the Term and for a period of one (1)
year or such longer period of time during which Unnold is continuing to receive
compensation from the Company after such termination, Unnold will not, directly
or indirectly, (A) enter into the employ of, or render any services to, any
person, firm or corporation engaged in any business directly competitive with
the business of III in any part of the Territory in which III is actively
engaged in business on the date of termination; (B) engage in any such business
for his own account; (C) become interested in any such business as an
individual, partner, shareholder, creditor, director, officer, principal, agent,
employee, trustee, consultant, advisor, franchisee or in any other relationship
or capacity; or (D) interfere with III's relationship with, or endeavor to
employ or entice away from III any person, firm, corporation, governmental
entity or other business organization who or which is or was an employee,
customer or supplier of, or maintained a business relationship with, III at any
time (whether before or after the Term), or which III has solicited or prepared
to solicit; provided, however, that the provisions of clause (A) shall not be
deemed to preclude Unnold from engagement by a corporation some of the
activities of which are competitive with the business of III if Unnold's
engagement does not relate, directly or indirectly, to such competitive
business,
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<PAGE> 8
and nothing contained in this Section 10 shall be deemed to prohibit Unnold from
acquiring or holding, solely for investment, publicly traded securities of any
corporation some of the activities of which are competitive with the business of
III so long as such securities do not, in the aggregate, constitute more than
five percent (5%) of any class or series of outstanding securities of such
corporation.
11. Specific Remedies.
For purposes of Sections 8, 9 and 10 of this Agreement, references
to III shall include all current and future majority-owned subsidiaries of III
and all current and future joint ventures in which III may from time to time be
involved. It is understood by Unnold and III that the covenants contained in
this Section 11 and in Sections 8, 9 and 10 hereof are essential elements of
this Agreement and that, but for the agreement of Unnold to comply with such
covenants, III would not have agreed to enter into this Agreement. III and
Unnold have independently consulted with their respective counsel and have been
advised concerning the reasonableness and propriety of such covenants with
specific regard to the nature of the business conducted by III and all interests
of III. Unnold agrees that the covenants of Sections 8, 9 or 10 hereof are
reasonable and valid. If Unnold commits a breach of any of the provisions of
Sections 8, 9 or 10 hereof, such breach shall be deemed to be grounds for
termination for Cause. In addition, Unnold acknowledges that III may have no
adequate remedy at law if he violates any of the terms hereof. Unnold therefore
understands and agrees that III shall have (i) the right to have such provisions
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach will cause irreparable injury to
III and that money damages will not provide an adequate remedy to III, and (ii)
the right to require Unnold to account for and pay over to III all compensation,
profits, monies, accruals, increments and other benefits (collectively
"Benefits") derived or received by Unnold as a result of any transaction
constituting a breach of any of the provisions of Sections 8, 9 or 10 and Unnold
hereby agrees to account for and pay over such Benefits to III.
12. Independence, Severability and Non-Exclusivity.
Each of the rights enumerated in Sections 8, 9 or 10 hereof and the
remedies enumerated in Section 11 hereof shall be independent of the others and
shall be in addition to and not in lieu of any other rights and remedies
available to III at law or in equity. If any of the covenants contained in
Sections 8, 9 or 10, or any part of any of them, is hereafter construed or
adjudicated to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants or right or remedies which shall be given
full effect without regard to the invalid portions. The parties intend to and do
hereby confer jurisdiction to enforce the covenants contained in Section 8, 9 or
10 and the remedies enumerated in Section 11 upon the federal and state courts
of Connecticut sitting in Fairfield County. If any of the covenants contained in
Sections 8, 9 or 10 is held to be invalid or unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall be the power to reduce the duration
and/or area of such provision and in its reduced from
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<PAGE> 9
said provision shall then be enforceable. No such holding of invalidity or
unenforceability in one jurisdiction shall bar on in any way affect III's right
to the relief provided in Section 11 or otherwise in the courts of any other
state or jurisdiction within the geographical scope of such covenants as to
breaches of such covenants in such other respective states or jurisdictions,
such covenants being, for this purpose, severable into diverse and independent
covenants.
13. Disputes. If III or Unnold shall dispute any termination of Unnold's
employment hereunder or if a dispute concerning any payment hereunder shall
exist:
(a) either party shall have the right (but not the obligation), in
addition to all other rights and remedies provided by law, to compel binding,
enforceable and non-appealable arbitration of the dispute in the City of New
York under the rules of the American Arbitration Association by giving written
notice of arbitration to the other party within thirty (30) days after notice of
such dispute has been received by the party to whom notice has been given; and
(b) if such dispute (whether or not submitted to arbitration
pursuant to Section 13(a) hereof) results in a determination that (i) III did
not have the right to terminate Unnold's employment under the provisions of this
Agreement or (ii) the position taken by Unnold concerning payments to Unnold is
correct, III shall promptly pay, or if theretofore paid by Unnold, shall
promptly reimburse Unnold for, all costs and expenses (including reasonable
attorneys' fees) reasonably incurred by Unnold in connection with such dispute.
14. Successors; Binding Agreement.
In the event of a future disposition by III (whether direct or
indirect), by sale of assets or stock, merger, consolidation or otherwise of all
or substantially all of its business and/or assets in a transaction to which
Unnold consents, III will require any successor, by agreement in form and
substance satisfactory to Unnold, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that III would be required
to perform if no such disposition had taken place.
This Agreement and all rights of Unnold hereunder shall inure to the
benefit of, and be enforceable by, Unnold's personal or legal representatives,
executors, administrators, administrators cta, successors, heirs, distributees,
devisees and legatees. If Unnold should die while any amount would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Unnold's estate.
15. Notices.
All notices, consents and other communications required or permitted
to be given by any party hereunder shall be in writing (including telecopy or
other similar writing) and shall be
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<PAGE> 10
given be personal delivery, certified or registered mail, postage prepaid, or
telecopy (or other similar writing) as follows:
To III: One Dock Street
Suite 500
Stamford, CT 06902
Attn: President
Telecopy: (203) 326-7672
With a copy to: Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, New York 10020
Attn: Michael Hirschberg, Esq.
Telecopy: (212) 835-6001
To Unnold: 52 Lanark Road
Stamford, CT 06902
or at such other address or telecopy number (or other similar number) as either
party may from time to time specify to the other. Any notice, consent or other
communication required or permitted to be given hereunder shall have been deemed
to be given on the date of mailing, personal delivery or telecopy or other
similar means (provided the appropriate answer back is received) thereof and
shall be conclusively presumed to have been received on the second business day
following the date of mailing or, in the case of personal delivery or telecopy
or other similar means, the day of delivery thereof, except that a change of
address shall not be effective until actually received.
16. Modifications and Waivers.
No term, provision or condition of this Agreement may be modified or
discharged unless such modification or discharge is authorized by the Board of
Directors of III and is agreed to in writing and signed by Unnold. No waiver by
either party hereto of any breach by the other party hereto of any term,
provision or condition of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
17. Entire Agreement.
This Agreement constitutes the entire understanding between the
parties hereto relating to the subject matter hereof, superseding all
negotiations, prior discussions, preliminary agreements and agreements relating
to the subject matter hereof made prior to the date hereof.
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<PAGE> 11
18. Law Governing.
Except as otherwise explicitly noted, this Agreement shall be
governed by and construed in accordance with the laws of the State of
Connecticut (without giving effect to the principles of conflicts of law).
19. Invalidity.
Except as otherwise specified herein, the invalidity or
unenforceability of any term or terms of this Agreement shall not invalidate,
make unenforceable or otherwise affect any other term of this Agreement which
shall remain in full force and effect.
20. Headings.
The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year set forth above.
INTELLIGENT INFORMATION INCORPORATED
By: /s/ Stephen G. Maloney
-----------------------
Stephen G. Maloney
President and Chief Executive Officer
/s/ Robert M. Unnold
--------------------
Robert M. Unnold
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<PAGE> 1
EXHIBIT 10.3
EMPLOYMENT AND ROYALTY AGREEMENT
AGREEMENT, dated this twenty seventh day of October, 1998, by and between
Intelligent Information Incorporated, a Delaware corporation with principal
executive offices at One Dock Street, Stamford, CT 06902 ("III") and Jeff Klein,
residing at 416 Twin Creek Drive, Hurst, TX 76053 ("Jeff Klein").
WITNESSETH:
III is desirous of employing Jeff Klein as Vice President -- Research &
Development, and Jeff Klein is desirous of serving III in such capacity, all
upon the terms and subject to the conditions hereinafter provided. In addition,
the parties are desirous of replacing the existing agreements for the payment of
royalties.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
Section I. Employment
1. Employment.
III agrees to employ Jeff Klein, and Jeff Klein agrees to be employed by
III, terms and subject to the conditions of this Agreement.
2. Term.
The employment of Jeff Klein by III as provided in Section I will be for a
period of three (3) years commencing January 1, 1999, unless sooner terminated
as hereinafter provided (the "Term"), and shall automatically renew from year to
year thereafter unless either party gives at least sixty (60) days prior written
notice of termination.
3. Position, Duties, Office, Best Efforts.
Jeff Klein shall serve as Vice President -- Research & Development of III
reporting to the Chief Executive Officer of III or his designee, and shall
perform such duties as are reasonably and customarily performed by the Vice
President -- Research & Development of a corporation, including but not limited
to long range technical planning, special development projects, and security and
risk analysis. Jeff Klein shall perform the assigned responsibilities and tasks
from a reasonably located office of his choosing. III will provide reasonably
appropriate access to facilities, computer systems, networks, equipment and
services to allow Jeff Klein to meet his responsibilities. Jeff Klein shall also
be a member of III's Executive Committee and will be afforded all rights and
privileges, associated with membership thereof.
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<PAGE> 2
Jeff Klein shall devote substantially all of his business time, attention
and energies to the business and affairs of III, shall use his best efforts to
advance the best interests of III and shall not during the Term be actively
engaged in any other competitive business activity, whether or not such business
activity is pursued for gain, profit or other pecuniary advantage.
4. Compensation.
(a) Base Salary. III shall pay to Jeff Klein a base salary (the "Base
Salary") at a rate of not less than $125,000 per annum, payable in equal
semi-monthly installments during the Term. The Base Salary will be adjusted
annually, effective each January 1st, during the Term based on the percentage
change in the National Consumer Price Index as reported last just prior to the
anniversary of the effective date of this Agreement, but in no case will such
change be less than a five percent (5%) increase in one year.
(b) Out-of-Pocket Expenses. III shall promptly pay to Jeff Klein the
reasonable expenses incurred by him in the performance of his duties hereunder,
including, without limitation, those incurred in connection with business
related travel or entertainment, or, if such expenses are paid directly by Jeff
Klein, shall promptly reimburse him for such payment, provided that Jeff Klein
properly accounts therefor in accordance with III's policy.
(d) Participation in Benefit Plans. Jeff Klein shall be entitled to
participate in or receive benefits under any pension plan, profit sharing plan,
stock option plan, stock purchase plan or arrangement, health and accident plan
or any other employee benefit plan or arrangement made available in the future
by III, to its key management employees.
(e) Vacation. Jeff Klein shall be entitled to paid vacation days in each
calendar year determined by III from time to time, but not less than three (3)
weeks in any calendar year, prorated in any calendar year during which Jeff
Klein is employed hereunder for less than an entire year in accordance with the
number of days in such year during which he is so employed. Jeff Klein shall
also be entitled to all paid holidays given by III to its key management
employees.
5. Termination.
Klein's employment hereunder shall be terminated upon Jeff Klein's death
and may be terminated by III as follows:
(a) For "Cause." A termination for Cause shall occur if Jeff Klein has (i)
failed to comply with any of the material terms of this Agreement, (ii) failed
to perform reasonable and defined duties hereunder, (iii) disregarded policy
directions from the Chief Executive Officer, (iv) engaged in gross misconduct
materially injurious to III or (v) been convicted of a felony or a crime of
moral turpitude, provided that, in the case of clauses (i), (ii) or (iii) above,
Jeff Klein has been given at least sixty (60) days written notice of the events
constituting cause and has failed to cure with reasonable efforts such events
during such notice period.
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<PAGE> 3
(b) Due to Jeff Klein's "Disability." For purposes of this Agreement, a
termination for Disability shall occur upon the sixty (60th) day after III has
provided a written termination notice to Jeff Klein supported by a written
statement from a reputable independent physician to the effect that Jeff Klein
shall have become so incapacitated as to be unable to resume, within the ensuing
twelve (12) months, his employment hereunder by reason of physical or mental
illness or injury. For purposes of this Section 5(b), Jeff Klein agrees to make
himself available and to cooperate in any reasonable examination by a reputable
independent physician retained by III.
During the initial term either Jeff Klein or III may terminate this Agreement
with sixty (60) days notice of its intent to do so.
6. Compensation upon Termination.
(a) In the event of the termination of Jeff Klein's employment as a result
of Jeff Klein's death or Disability or for Cause or Jeff Klein's notice of
termination, III shall pay to Jeff Klein or his estate his Base Salary through
the date of his death, Disability or termination.
(b) In the event that Jeff Klein's employment is terminated by III other
than as a result of Jeff Klein's death or Disability or for Cause, III shall
continue to pay to Jeff Klein his Base Salary during the balance of the Term (as
if such termination had not occurred), but for not more than eighteen months. In
addition, for the balance of the Term (as if such termination had not occurred)
but for not more than eighteen months, III shall provide Jeff Klein continuation
coverage under all major medical and other health, accident, life or other
disability plans or programs in which Jeff Klein participated immediately prior
to such termination.
(c) The continuation coverage under any major medical and other health,
accident, life or other disability plans and programs for the periods provided
in Section 6(b) shall be provided (i) at the expense of III and (ii) in
satisfaction of III's obligation under Section 4980B of the Internal Revenue
Code (and any similar state law) with respect to the period of time such
benefits are continued hereunder. Notwithstanding anything to the contrary
contained herein, III's obligation to provide such continuation coverage under
Section 6(b) shall cease immediately upon the date any covered individual
becomes eligible for similar benefits under the plans or policies of another
employer.
(d) This Section 6 sets forth the only obligations of III with respect to
the termination of Jeff Klein's employment with III, and Jeff Klein acknowledges
that, upon the termination of his employment, he shall not be entitled to any
payments or benefits which are not explicitly provided herein.
7. Covenant Regarding Inventions and Copyrights.
Jeff Klein shall disclose promptly to III any and all inventions,
discoveries, improvements and patentable or copyrightable works initiated,
conceived or made by him, either alone or in conjunction with others, during the
Term and related to the business or activities of III
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<PAGE> 4
and he assigns all of his interest therein to III or its nominee; whenever
requested to do so by III, Jeff Klein shall execute any and all applications,
assignments or other instruments which III shall deem necessary to apply for and
obtain letters patent or copyrights of the United States or any foreign country,
or otherwise protect III's interest therein. These obligations shall continue
beyond the conclusion of the Term with respect to inventions, discoveries,
improvements or copyrightable works initiated, conceived or made by Jeff Klein
during the Term and shall be binding upon Jeff Klein's assigns, executors,
administrators and other legal representatives.
8. Protection of Confidential Information.
Jeff Klein acknowledges that he has been and will be provided with
information about, and his employment by III will, throughout the Term, bring
his into close contact with, many confidential affairs of III and its
subsidiaries, including proprietary information about costs, profits, markets,
sales, products, key personnel, pricing policies, operational methods, technical
processes and other business affairs and methods, plans for future developments
and other information not readily available to the public, all of which are
highly confidential and proprietary and all of which were developed by III at
great effort and expense. Jeff Klein further acknowledges that the services to
be performed by his under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character, that the business of III will be
conducted throughout the world (the "Territory"), that its services will be
marketed throughout the Territory, that III competes and will compete in nearly
all of its business activities with other organizations which are located in
nearly any part of the Territory and that the nature of the relationship of Jeff
Klein with III is such that Jeff Klein is capable of competing with III from
nearly any location in the Territory. In recognition of the foregoing, Jeff
Klein covenants and agrees during the Term and for a period of five (5) years
thereafter:
(i) That he will keep secret all confidential matters of III and not
disclose them to anyone outside III, either during or after the Term, except
with III's prior written consent;
(ii) That he will not make use of any of such confidential matters for his
own purposes or the benefit of anyone other than III; and
(iii) That he will deliver promptly to III on termination of this
Agreement, or at any time III may so request, all confidential memoranda, notes,
records, reports and other confidential documents (and all copies thereof)
relating to the business of III, which he may then possess or have under his
control.
9. Restriction on Competition, Interference and Solicitation.
In recognition of the considerations described in Section 8 hereof, Jeff
Klein covenants and agrees that during the Term and for a period of one (1) year
after the termination of his employment hereunder, Jeff Klein will not, directly
or indirectly, (A) enter into the employ of, or render any services to, any
person, firm or corporation engaged in any business competitive with the
business of III in any part of the Territory in which III is actively engaged in
business on the
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<PAGE> 5
date of termination; (B) engage in any such business for his own account; (C)
become interested in any such business as an individual, partner, shareholder,
creditor, director, officer, principal, agent, employee, trustee, consultant,
advisor, franchisee or in any other relationship or capacity; or (D) interfere
with III's relationship with, or endeavor to employ or entice away from III any
person, firm, corporation, governmental entity or other business organization
who or which is or was an employee, customer or supplier of, or maintained a
business relationship with, III at any time (whether before or after the Term),
or which III has solicited or prepared to solicit; provided, however, that the
provisions of clause (A) shall not be deemed to preclude Jeff Klein from
engagement by a corporation some of the activities of which are competitive with
the business of III if Jeff Klein's engagement does not relate, directly or
indirectly, to such competitive business, and (B) nothing contained in this
Section 9 shall be deemed to prohibit Jeff Klein from acquiring or holding,
solely for investment, publicly traded securities of any corporation some of the
activities of which are competitive with the business of III so long as such
securities do not, in the aggregate, constitute more than five percent (5%) of
any class or series of outstanding securities of such corporation.
10. Succession Plan.
Jeff Klein will assist and cooperate in the development/recruiting and
training of a successor to his current position, Vice President - Development,
in order to facilitate for him, and III, an orderly transition to his new
position. Such a transition will be accomplished as soon as possible with both
parties using their best efforts to select a Vice President -- Technology &
Systems, the successor title to Vice President - Development.
Section II. Royalty
11. Royalty Payable.
For value received by III from Jeff Klein, the adequacy of which is
confessed by III, the total royalty payable from III to Jeff Klein, as of the
end of 1997 is four hundred sixty six thousand nine hundred forty seven dollars
($466,947). The parties agree that royalty has been paid during 1998 and will
continue to be paid during the remainder of 1998 in accordance with paragraph 12
below.
12. Royalty.
III will pay to Jeff Klein two percent (2%) of all III and III
subsidiaries' Gross Revenue, on a monthly basis, for the prior calendar month. A
monthly financial report indicating how the calculation was made will also be
provided.
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<PAGE> 6
13. Continuance.
Royalty due to Jeff Klein will continue to be paid to Jeff Klein's
immediate family members, i.e., spouse, son and daughter, in the event of Jeff
Klein's death prior to the completion of the Royalty obligation above.
14. Buy Down Option.
III may at its option, at any time, make advanced royalty payments
reducing the Royalty Payable Amount by $3.00 for each $2.00 actually paid.
Section III. General
15. Successors: Binding Agreement.
This Agreement shall be binding upon and inure to the benefit of, and be
enforceable by, the parties hereto and their respective personal and legal
representatives, executors, administrators, heirs, successors and assigns.
16. Surviving Terms.
Those terms specifically containing surviving conditions and all of
Section II shall survive the termination of this agreement and shall remain in
full force until such time as the conditions therein have been fulfilled.
Options granted under prior Employment Agreements and Employee Option Plans will
remain in affect as provided for under such agreements.
17. Notices.
All notices, consents or other communications required or permitted to be
given by any party hereunder shall be in writing and shall be given by personal
delivery, certified or registered mail, or express delivery service, as follows:
To III:
One Dock Street
Suite 500
Stamford, CT 06902
Attn: Chief Executive Officer
(203) 969 0020
With a copy to:
Piper & Marbury L.L.P.
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<PAGE> 7
1251 Avenue of the Americas
New York, New York 10020
Attn: Michael Hirschberg, Esq.
(212) 835 6270
To Jeff Klein:
416 Twin Creek Drive
Hurst, TX 76053
(817) 284 2873
or at such other address as either party may from time to time specify to the
other. Any notice, consent or other communication required or permitted to be
given hereunder shall have been deemed to be given on the date of mailing,
personal delivery or express delivery service and shall be conclusively presumed
to have been received on the second business day following the date of mailing
or, in the case of personal delivery, the day of delivery thereof, except that a
change of address shall not be effective until actually received.
18. Modifications and Waivers.
No term, provision or condition of this Agreement may be modified or
discharged unless such modification or discharge is authorized by the Chief
Executive Officer of III and is agreed to in writing and signed by Jeff Klein.
No waiver by either party hereto of any breach by the other party hereto of any
term, provision or condition of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
19. Entire Agreement.
This Agreement constitutes the entire understanding between the parties
hereto relating to the subject matter hereof, superseding all negotiations,
prior discussions, preliminary agreements and agreements relating to the subject
matter hereof made prior to the date hereof, effective January 1, 1999.
20. Law Governing.
Except as otherwise explicitly noted, this Agreement shall be governed by
and construed in accordance with the laws of the State of New York (without
giving effect to the principles of conflicts of law).
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<PAGE> 8
21. Invalidity.
Except as otherwise specified herein, the invalidity or unenforceability
of any term of this Agreement shall not invalidate, make unenforceable or
otherwise affect any other term of this Agreement which shall remain in full
force and effect.
22. Headings.
The headings contained in this Agreement are for reference purposes only
and shall not affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year set forth above.
Intelligent Information Incorporated
By: /s/ Robert M. Unnold SGM
-------------------------
Robert M. Unnold Dated: 10/27/98
Chief Executive Officer --------
/s/ Jeff Klein
- -----------------------------
Jeff Klein Dated 10/27/98
--------
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<PAGE> 1
EXHIBIT 10.4
AGREEMENT OF LEASE
BETWEEN
SEABOARD PROPERTY MANAGEMENT, INC.
RECEIVER ONE DOCK STREET
(LANDLORD)
AND
INTELLIGENT INFORMATION INCORPORATED
(TENANT)
DATED: April 27, 1995
WITH RESPECT TO PREMISES LOCATED
AT ONE DOCK STREET
STAMFORD, CONNECTICUT 06902
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TABLE OF CONTENTS
1. Definitions ........................................................... 1
2. Demised Premises, Rent and Term ....................................... 2
3. Landlord's Work ....................................................... 3
4. Force Majeure ......................................................... 3
5. Use and Occupancy ..................................................... 3
6. Subordination ......................................................... 4
7. Alienation ............................................................ 4
8. Tenant's Certificate .................................................. 5
9. Compliance With Laws .................................................. 5
10. Floor Loads ........................................................... 5
11. Property Loss ......................................................... 5
12. Destruction by Fire or Other Casualty ................................. 6
13. Indemnity, Liability Insurance ........................................ 7
14. Eminent Domain ........................................................ 8
15. Alterations ........................................................... 8
16. Repairs ............................................................... 9
17. Operating Expenses .................................................... 10
18. Real Estate Taxes ..................................................... 12
19. Electricity ........................................................... 13
20. Services Provided by Landlord ......................................... 14
21. Signs ................................................................. 15
22. Exculpation ........................................................... 15
23. No Representation by Landlords ........................................ 15
24. Brokers ............................................................... 15
25. End of Term ........................................................... 15
26. Default ............................................................... 16
27. Additional Default Remedies ........................................... 17
28. Effect of Re-entry .................................................... 17
29. Fees and Expenses ..................................................... 18
30. Bankruptcy and Insolvency ............................................. 19
31. Holding Over .......................................................... 19
32. Waiver of Trial by Jury ............................................... 20
33. No Waiver ............................................................. 20
34. Bills and Notices ..................................................... 20
35. Access to Demised Premises ............................................ 20
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36. Captions .............................................................. 21
37. Restrictions .......................................................... 21
38. Rules and Regulations ................................................. 21
39. Quiet Enjoyment ....................................................... 21
40. Successors and Assigns ................................................ 22
41. Security Deposit ...................................................... 22
42. Consent ............................................................... 22
43. Mortgagee ............................................................. 22
44. Transfer of Landlord's Interest ....................................... 23
45. Notices ............................................................... 23
46. Shoring ............................................................... 24
47. Miscellaneous ......................................................... 24
48. Acceptance ............................................................ 25
EXHIBIT 1 Demised Premises
EXHIBIT 2 Landlord's Work
EXHIBIT 3 Cleaning Specifications
EXHIBIT 4 Rules and Regulations
EXHIBIT 5 Anticipated Base Year Operating Expenses
EXHIBIT 6 Extension Options
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AGREEMENT OF LEASE, entered into this 27th day of April, 1995 between SEABOARD
PROPERTY MANAGEMENT, INC., a Delaware Corporation, having an address at Two
Stamford Landing, 68 Southfield Avenue, Stamford, Connecticut 06902 (hereinafter
the "Landlord"), and INTELLIGENT INFORMATION INCORPORATED, a Delaware
corporation having an address at 6 Suburban Ave., Stamford, Connecticut
(hereinafter the "Tenant").
W I T N E S S E T H:
Landlord and Tenant hereby covenant as follows:
1. Definitions. As used in this Agreement of Lease and all modifications
and agreements supplemental thereto, the following terms shall have the
meanings set forth herein.
Additional Rent: All sums payable by Tenant to Landlord hereunder, other
than Fixed Rent.
Base Year: The calendar year commencing January 1, 1995 and ending
December 31, 1995.
Brokers: Pierson & Smith Commercial Real Estate, Inc.
Seaboard Property Management, Inc.
Building: That office building having an address of One Dock Street,
Stamford, Connecticut.
Demised Premises: That area on the fifth floor of the Building edged in
red on the floor plan attached hereto as Exhibit 1 and made a part hereof.
Extension Period: Any of the extension periods more particularly described
in Exhibit 6 attached hereto and made a part hereof.
Fixed Rent: The fixed rent payable pursuant to the provisions of Section
2(d) below.
Initial Electrical Charge: $1.70 per square foot per year. Tenant's
Electrical Charge shall not increase through the Term of the Lease.
Landlord's Work: Renovation work to be performed by Landlord as set forth
in Exhibit 2 attached hereto and made a part hereof.
Lease: This Agreement of Lease, as the same may hereafter be modified or
amended.
Lease Commencement Date: The first (1st) day of the month following
substantial completion of Landlord's Work, but in no event later than June
1, 1995.
Minimum Required Casualty Insurance Coverage: $1,000,000
Number of Tenant's Parking Spaces: Ten (10)
Operating Expenses: Those expenses incurred by Landlord in
operating the Building more particularly described in Section 17(a) below.
Property: All land, common areas, improvements and facilities serving the
Building and made available by easement, license, agreement or otherwise,
except that Landlord reserves the right to sever the ownership or right of
use to any portion of the Property at any time provided such severance
does not interfere with Tenant's occupancy of the Demised Premises, so
that such portion so severed shall be excluded from the Property for
purposes of this Lease.
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Real Estate Taxes: All those taxes described in Section 18(a) below.
Rent: The Fixed Rent and Additional Rent together.
Tenant's Proportionate Share of Landlord's Electrical Expense: 3.71%
Tenant's Proportionate Share of Real Estate Tax Increases: 3.71%
Tenant's Proportionate Share of Operating Expense Increases: 3.71%
Tenant's Rentable Square Footage: 3,217 square feet.
Term: A period of five years commencing upon the Lease Commencement Date,
provided that if this Lease is extended pursuant hereto, the word "Term"
as used herein, shall (unless the context requires otherwise) include any
Extension Period.
2. Demised Premises, Rent and Term.
a. Landlord hereby leases to Tenant and Tenant hereby hires from Landlord the
Demised Premises for the duration of the Term, unless sooner terminated in
accordance with the provisions herein contained, together with the nonexclusive
right to use, in common with Landlord, those public and common areas of the
Building and the Property as Landlord shall from time to time designate as
available for the common use of tenants within the Building. Following the
expiration of the Term, Tenant shall have the option to extend this Lease for
one or both of the Extension Periods, in accordance with the provisions of said
Exhibit 6. Following the determination of the Lease Commencement Date, Landlord
and Tenant shall, upon request by either of them, execute and deliver a
memorandum of this Lease in accordance with the provisions of Section 47(e)
below.
Together with the Demised Premises, Landlord will make available to Tenant, on a
non-exclusive basis, the number of parking spaces set forth in Section 1 above
(the "Parking Spaces") which Parking Spaces shall be situated within the parking
lot (the "Parking Lot") serving the Building and shall be available for the
parking of cars by Tenant and Tenant's licensees and clients. It is agreed,
stipulated and understood that the Parking Spaces shall not be individually
designated for Tenant's use. Landlord shall regulate the use of the Parking Lot
by others, and in connection therewith, Landlord may adopt rules and regulations
with respect thereto and may employ any measures which Landlord deems
appropriate, including (without limitation) the use of an attendant and by
requiring the use of parking identification stickers for regulating admittance
into the Parking Lot. Tenant shall cooperate with all such rules and regulations
and in particular (without limitation) if requested by Landlord, Tenant shall
notify Landlord of the license plate number, year, make and model of the
automobiles entitled to use the Parking Spaces and if requested by Landlord, all
such automobiles shall be identified by automobile window stickers provided by
Landlord, so that only such designated automobiles shall be permitted to use the
Parking Spaces. It is further agreed, stipulated and understood that the Parking
Spaces are provided solely for the accommodation of Tenant, and that Landlord
assumes no responsibility or liability of any kind whatsoever from any cause
with respect to or arising out of Tenant's use of the Parking Spaces, the
Parking Lot or adjoining streets, sidewalks, driveways, property and passageways
and/or the use thereof by Tenant's agents, licensees or clients.
During the Term, Tenant agrees to pay to Landlord at Landlord's
above-referenced address, or at such other address as Landlord may from time to
time notify Tenant, the Fixed Rent described in Section 2(d) below, which Fixed
Rent shall be payable in monthly
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installments in advance, commencing on the Lease Commencement Date and on the
first day of each month thereafter, in lawful money of the United States of
America, without any prior demand therefor and without any deduction or offset
whatsoever. In the event that substantial completion shall occur other than upon
the first (1st) day of a month, then Tenant shall be permitted to occupy the
Demised Premises following substantial completion and the Rent shall be
pro-rated up to the Lease Commencement Date.
The Fixed Rent payable hereunder shall be as follows:
Yr. 1 $33,750 Payable in equal monthly installments
Yr. 2 41,821 Payable in equal monthly installments
Yr. 3 43,429 Payable in equal monthly installments
Yr. 4 45,038 Payable in equal monthly installments
Yr. 5 46,646 Payable in equal monthly installments
During any Extension Period, the Fixed Rent shall be determined in
accordance with the provisions of said Exhibit 6.
3. Landlord's Work. Landlord shall, at Landlord's sole cost and expense, and in
a good and workmanlike manner, carry out Landlord's Work. In the event that
Tenant shall request any other work, then Tenant shall prepare plans and
specifications with respect thereto, consistent with all applicable building
codes, and with the design, structural capabilities, construction and equipment
of the Building for Landlord's review. If Landlord shall approve the same (which
approval should not be unreasonably withheld) then such work ("Special Work")
shall be carried out by Landlord provided that Landlord shall submit to Tenant
an estimate of the cost of the same and a statement of terms and conditions
prior to commencing such Special Work. The "cost" of Special Work shall mean the
actual cost incurred by Landlord in having such work performed by Landlord's
contractor(s) plus the charges of any engineers whose services may be required,
plus ten (10%) percent overhead and ten (10%) percent profit. Notwithstanding
any of the foregoing, it is agreed and understood that all HVAC, electrical,
plumbing and structural plans and specifications forming part of any Special
Work, shall be prepared by Landlord's engineers at Tenant's sole cost and
expense.
4. Force Majeure. Except as otherwise set forth herein, this Lease and the
obligation of Tenant to pay rent hereunder and perform all of the other
covenants and agreements hereunder on part of Tenant to be performed shall in no
way be affected, impaired or excused because Landlord is unable to fulfill any
of its obligations under this Lease or to supply or is delayed in supplying any
service expressly or implied to be supplied or is unable to make, or is
delayed in making any repair, additions, alterations, or decorations or is
unable to supply or is delayed in supplying any equipment or fixtures if
Landlord is prevented or delayed from so doing within the time periods
applicable thereto by reason of strike or labor troubles or any cause whatsoever
beyond its reasonable control, including but not limited to, delays in obtaining
governmental approvals, inability or delays in obtaining labor or materials,
governmental preemption in connection with a National Emergency or by reason of
any rule, order or regulation of any department or subdivision thereof or by
reason of the conditions of supply and demand which have been or are affected by
war or other emergency.
5. Use and Occupancy. Tenant shall use and occupy the Demised Premises for
general office purposes only, and for no other purpose (the "Represented Use").
Landlord represents that the Represented Use does not, as of the Lease
Commencement Date, violate either the zoning laws covering the use of the
Demised Premises or make void or voidable any insurance of Landlord now in
effect. Tenant shall not at any time use or occupy, or suffer or permit anyone
to use or occupy, the Demised Premises or do or permit anything to be done in
the Demised Premises which: (i) causes or is liable to cause
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injury to persons, to the Building or its equipment, facilities or systems; (ii)
impairs or tends to impair the character, reputation or appearance of the
Building as a first-class office building; (iii) impairs or tends to impair the
proper and economic maintenance, operation and repair of the Building or its
equipment, facilities or systems; or (iv) annoys or inconveniences or tends to
annoy or inconvenience other tenants or occupants of the Building.
6. Subordination. This Lease is subject and subordinate to all mortgages and all
ground or underlying leases and to all leasehold mortgages which may now or
hereafter affect any such leases, covering the Building or the Property, and to
all renewals, modifications, consolidations, replacements and extensions of any
such instruments. This clause shall be self-operative and no further instrument
of subordination shall be required by the holder of any such mortgage or ground
or underlying lease. In confirmation of such subordination, Tenant shall, within
thirty (30) days after notice, execute and deliver a certificate, in such form,
as Landlord may reasonably request. If Tenant fails to execute, acknowledge or
deliver any such certificate within such thirty (30) day period, Tenant hereby
irrevocably constitutes and appoints Landlord as Tenant's attorney-in-fact,
coupled with an interest, to execute and deliver the same for and on behalf of
Tenant.
7. Alienation
Except as expressly set out in Section 7(b) below, Tenant shall not assign,
sublet, mortgage, or otherwise alienate Tenant's interest under this Lease in
any way whatsoever or otherwise suffer or permit the Demised Premises or any
part thereof to be used by any other party. Notwithstanding the foregoing, if
Tenant shall alienate Tenant's interest hereunder in breach of the provisions of
this Section 7(a), then without prejudice as to any other rights and remedies of
Landlord, Landlord may collect rent from any assignee, subtenant, licensee or
other occupant and apply the net amount collected to the Rent, provided that no
such collection of rent by Landlord shall be deemed a waiver of the provisions
of this section 7(a) or the acceptance by Landlord of any third party as
"Tenant" hereunder, or as a release of Tenant from the further performance of
Tenant's covenants herein contained. It is agreed and understood that for the
purposes of this Lease, an "assignment" prohibited hereunder shall be deemed to
have occurred in the event that Tenant is at any time a partnership, and there
shall be a withdrawal or change (voluntary, involuntary, by operation: of law or
otherwise) of any of the partners thereof or a dissolution of the same or, in
the event that Tenant is at any time a corporation, and there shall occur a
dissolution, merger, consolidation or other reorganization of Tenant or any
change in the ownership (voluntary, involuntary, by operation of law, creation
of new stock or otherwise) of fifty (50%) percent or more of Tenant's stock, or
in the event of a sale of fifty (50%) percent or more of the value of Tenant's
assets from time to time. However, it is further agreed and understood that
Tenant shall be permitted to assign Tenant's interests hereunder to any
corporation which is a parent, subsidiary or affiliate of Tenant. For the
purposes of this Section 7(a), a "parent" shall mean a corporation which owns
one hundred (100%) percent of the outstanding stock of Tenant, a "subsidiary"
shall mean any corporation of which Tenant owns one hundred (100%) percent of
all outstanding stock, and an "affiliate" shall mean any corporation with one
hundred (100%) percent of its stock owned by Tenant's parent.
Notwithstanding the provisions of Section 7(a) above, it is agreed and
understood that Tenant may, with the express prior written consent of Landlord,
which shall not be unreasonably withheld, sublet all of Tenant's interest in
this Lease. Any request by Tenant to grant a sublease shall contain all of the
material terms of the proposed subletting. Following receipt of Tenant's notice,
Landlord shall have a period of thirty (3O) days to either consent or refuse
consent to the proposed subletting and if Landlord shall
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fail to respond during said thirty (30) day period, Landlord shall be presumed
to have rejected the same. In the event that Landlord shall consent to the
subletting, all 50/50 profits accruing to Tenant as a result of such subletting
shall be the sole and absolute property of Landlord, including any premium paid
by the subtenant and any excess rental payment, but less any and all
transactional costs paid by Tenant. Tenant shall reimburse Landlord on demand
for any and all reasonable costs that Landlord may incur in connection with any
proposed subletting by Tenant, including (without limitation) the costs of
investigating' the acceptability of the proposed subtenant, and all legal costs
incurred in connection with the granting any of requested consent and the
preparation of documentation with respect thereto. It is agreed and understood
that any subletting made with the consent of Landlord shall not affect the
continuing primary liability of Tenant hereunder (which, following any such
subletting, shall be joint and several with the subtenant) so that Tenant shall
not be released from performing any of the terms, covenants and conditions of
this Lease by reason of such subletting.
8. Tenant's Certificate. Tenant shall, without charge at any time and from time
to time, within ten days after request by Landlord, certify by written
instrument duly acknowledged and delivered to any proposed or actual mortgagee
(including, without limitation, Mortgagee, as defined in Section 43 below),
assignee of any mortgage or purchaser, or any other person, firm or corporation
specified by Landlord:
That this Lease is unmodified and in full force and effect, or, if there has
been modification, that the same is in full force and effect as modified and
stating the modifications.
That there are then existing no setoffs, or defenses against the enforcement of
any of the agreements, terms, covenants or conditions hereof upon the part of
Tenant to be performed or complied with and that Landlord is not in default
under any provision of this Lease or any modification, extension or renewal of
this Lease or, if not the case specifying the alleged default.
The dates, if any, to which the Rent has been paid in advance.
9. Compliance With Laws. Tenant, at Tenant's expense, shall duly comply with all
laws and ordinances and the orders, rules, regulations and requirements of
federal, state and municipal governments and departments thereof, now or
hereafter referable to or arising by reason of Tenant's occupancy, use or manner
of use of the Demised Premises or the Parking Lot or any installations made
therein by or on behalf of Tenant. However, Tenant shall not be obligated to
make any structural changes or alterations to comply therewith unless they are
made necessary by reason of the negligence or improper conduct of Tenant, or of
Tenant's employees, agents visitors, contractors, invitees, or by reason of
Tenant's wrongful use of the Demised Premises.
10. Floor Loads. Tenant shall not place a load upon any floor of the Demised
Premises exceeding seventy (70) pounds per square foot. Landlord reserves the
right to prescribe the weight and position of all safes, business machines,
mechanical equipment and other unusually heavy equipment. Such installments
shall be placed and maintained by Tenant, at Tenant's expense, in settlings
sufficient, in Landlord's judgment, to absorb and prevent vibrations,
unreasonable notice and annoyance.
11. Property Loss. Neither Landlord nor Landlord's agents shall be liable for
any damage to property of Tenant or of others entrusted to employees of the
Building, nor for loss of or damage to any property of Tenant by theft or
otherwise, nor for injury or damage to persons or property resulting from any
cause of whatsoever nature, unless caused by or due to the negligence or willful
acts of Landlord, or of Landlord's agents, servants or
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employees, invitees, or by Landlord's failure to perform its covenants under
this Lease, nor shall Landlord or Landlord's agents be liable for any such
damage caused by other Tenant's or persons in, upon or about said Building or
caused by operations in construction of any private, public or quasi-public
work. After the Lease Commencement Date, Tenant shall not move any bulky matter
or bulky fixtures into or out of the Building without Landlord's prior written
consent which shall not be unreasonably withheld or delayed. If such bulky
matter or bulky fixtures require special handling, all work in connection
therewith shall comply with all laws and regulations applicable thereto and
shall be done during such hours as Landlord may reasonably designate. Tenant
shall indemnify and save, harmless Landlord against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Landlord
shall not be reimbursed by insurance (including reasonable attorney's fees)
which are paid, suffered or incurred as a result of any breach by Tenant, or by
Tenant's agents, contractors, employees, invitees, or licensees, of any covenant
or condition of this Lease or by the negligent or willful acts of Tenant or of
Tenant's agents, contractors, clients or licensees. Tenant's liability under
this Lease extends to the acts and omissions of any licensee of Tenant and any
agent, contractor, employee, invitee or licensee of any such licensee, but does
not extend to the acts or omissions of Landlord or Landlord's employees,
contractors or agents when they act as contractor or agent for any such
licensee. The liability of Tenant to indemnify and save harmless Landlord, shall
not extend to any matter against which Landlord shall be effectively protected
by insurance, provided, however, that if any such liability shall exceed the
amount of the effective and collectible insurance in question (unless the
non-collectibility thereof shall have resulted from or been caused by the acts
of Landlord or Landlord's agents, servants, employees, guests or invitees) said
liability of Tenant shall apply to such excess, and provided further that said
limitation will not constitute a violation by Landlord of any provision of any
applicable insurance policy or an act which would impair payment of the proceeds
under any such policy. Landlord and Tenant each agree to obtain (if available)
mutual "waiver of subrogation clauses" in their respective liability and
casualty insurance policies to the effect that each party and their respective
insurance companies will not see recovery from the other party to the extent a
casualty loss is covered by their respective insurance policies.
12. Destruction by Fire or Other Casualty. If the Demised Premises shall be
damaged by fire or other casualty, Tenant shall give immediate notice thereof to
Landlord and this Lease shall continue in full force and effect except as
hereinafter set forth. If the Demised Premises are partially unusable, then at
Landlord's election, either (a) such damage shall be repaired and rebuilt with
reasonable diligence by and at the expense of Landlord to the extent insurance
proceeds are actually paid to Landlord, and the Fixed Rent and all Additional
Rent, from the day following the casualty until the date upon which such repair
shall be substantially completed, shall be abated in proportion to the part of
the Demised Premises which are unusable; or (b) this Lease may be terminated
upon Landlord furnishing Tenant with written notice of such termination. If the
Demised Premises are totally damaged or rendered wholly unusable by fire or
other casualty, then the Fixed Rent shall be proportionately paid up to the date
of the casualty and thereafter shall cease until the date when the Demised
Premises shall have been repaired, rebuilt and restored by Landlord to
substantially the same condition as the Demised Premises were as of the Lease
Commencement Date, subject to the Landlord's right to elect not to restore the
same and Tenant's right to terminate this Lease as hereinafter provided. If the
Demised Premises are rendered wholly unusable (whether or not the Demised
Premises are damaged in whole or in part) or if the Building shall be so damaged
that Landlord shall decide to demolish it or not to rebuild or repair the same,
or if Landlord shall decide to rebuild the same, but if Landlord does not
substantially complete the repair or re-
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building of the Demised Premises within ninety (90) days following such casualty
(but subject to Force Majeure as described in Section 4 above), then in any of
such events, Landlord or Tenant may elect to terminate this Lease by written
notice to the other given within one hundred eighty (180) days after the date of
such fire or casualty. Such notice shall specify a date for the expiration of
this Lease, and upon the date specified the Term shall expire by lapse of time
as fully and completely as if such date were the scheduled expiration date of
this Lease and Tenant shall forthwith quit, surrender and vacate the Demised
Premises, but without prejudice, to Landlord's rights and remedies against
Tenant arising prior to such termination, and any Rent owing shall be paid up to
the date of such termination and any payments of Rent made by Tenant which were
on account of any period subsequent to such date shall be returned to Tenant.
Unless Landlord shall serve a termination notice as provided for herein,
Landlord shall make repairs and restorations as herein set forth with all
reasonable expedition, subject to delays caused by Force Majeure. Nothing
contained herein shall relieve Tenant from liability hereunder that may exist as
a result of damage from fire or other casualty. Tenant acknowledges that
Landlord will not carry insurance with respect to Tenant's furniture and/or
furnishings or any fixtures or equipment, improvements, or appurtenances
removable by Tenant and agrees that Landlord will not be obligated to repair any
damage thereto or replace the same. Landlord shall keep the Building, including
Landlord's Work, insured against loss or damage by fire and against loss or
damage by other risks now or hereafter embraced by "Extended Coverage",
so-called, and against such other risks as prudent operators of similar
facilities would normally insure in amounts sufficient to prevent Landlord from
becoming a coinsurer under the terms of the applicable policies, but in any
event in an amount not less than eighty (80%) percent of the then "full
replacement cost" ("full replacement cost" being the cost of replacing the
Building excluding the cost of excavations, foundations and footings). In the
event that Tenant's use of the Demised Premise shall be violative of the rules
and regulations of the Fire Insurance Rating Organization and, as a result
thereof, Tenant cannot continue the Represented Use without being in default of
this Lease, Tenant shall nonetheless remain liable to Landlord for the faithful
observance of all the terms, covenants and conditions of this Lease.
13. Indemnity, Liability Insurance. Tenant shall indemnify and save Landlord
harmless from and against any and all claims, suits, actions, damages,
liabilities and expenses, including reasonable attorneys' fees and investigation
costs for damages or injuries to goods, wares, merchandise and property and/or
for any personal injury or loss of life in, upon or about the Demised Premises
(except such claims as may be the result of the negligence or willful misconduct
of Landlord, Landlord's agents, employees, or contractors) occasioned in whole
or in part by any act or omission by Tenant, Tenant's agents, employees,
invitees or contractors and arising during the Term or (if applicable) any
earlier occupation of the Demised Premises by Tenant. Tenant shall provide on
the earlier of (a) the Lease Commencement Date or (b) Tenant's possession of the
Demised Premises, and shall keep in force during the Term for the benefit of
Landlord and Tenant, a comprehensive policy of general liability insurance
protecting Landlord and Tenant against any liability whatsoever occasioned by
accident on or about the Demised Premises or the appurtenances thereof. Landlord
shall be a "named insured" on such policy. Such policy shall be written by good
and solvent insurance companies approved by Landlord and licensed to do business
in the State of Connecticut, with a combined singe limit of not less than the
Minimum Required Casualty Insurance Coverage. Such insurance policy shall
contain appropriate endorsements denying Tenant's insurers the right of
subrogation against Landlord. Prior to the time such insurance is first required
to be carried by Tenant, and thereafter, at least thirty (30) days prior to the
expiration of any such policy, Tenant agrees to deliver to Landlord either a
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duplicate original of the same policy or a certificate evidencing such insurance
provided that such certificate contains an endorsement that such insurance may
not be cancelled except upon thirty (30) days notice to Landlord, together with
evidence of payment for the policy. Tenant's failure to provide and keep in
force such insurance shall be regarded as a material default hereunder entitling
Landlord to exercise any or all of the remedies provided for in this Lease
following an event of default.
14. Eminent Domain.
If the whole of the Property or the Building is taken by condemnation or in any
other manner for any public or quasi-public purpose, this Lease shall terminate
as of the date of vesting of title in the condemning authority (the "Date of
Taking"), and the Rent shall be prorated to the Date of Taking. If any part of
the Building or Property is so taken, this Lease shall be unaffected by such
taking, except that (i) Landlord, in Landlord's sole discretion, may terminate
this Lease by notice to Tenant within ninety (90) days after the Date of Taking,
and (ii) if 20% or more of the Demised Premises shall be taken and the remaining
area of the Demised Premises, in Tenant's reasonable estimation, shall not be
reasonably sufficient for Tenant to continue operation of Tenant's business,
Tenant may terminate this Lease by notice to Landlord within ninety (90) days
after the Date of Taking. This Lease shall terminate on the thirtieth (30th) day
after any such notice by Landlord or Tenant, by which date Tenant shall vacate
and surrender the Demised Premises to Landlord, and in which case the Rent shall
be prorated to such date as Tenant vacates the Demised Premises by reason of
such taking. If this Lease continues in force upon such partial taking, the Rent
and Tenant's Proportionate Share of Landlord's Electrical Expense, Operating
Expense Increases and Real Estate Tax Increases shall be equitably adjusted
according to the rentable area of the Demised Premises and the Building
remaining after such partial taking.
In the event of any taking as set forth in the immediately preceding subsection,
all of the proceeds of any award, judgment or settlement payable by the
condemning authority shall be and remain the sole and exclusive property of
Landlord, and Tenant hereby assigns all of Tenant's right, title and interest in
and to any such award, judgment or settlement to Landlord. Tenant, however,
shall have the right (to the extent that the same shall not reduce or prejudice
any award, judgment or settlement to Landlord) to claim from the condemning
authority ( but not from Landlord) such compensation as may be recoverable by
Tenant in Tenant's own right for moving expenses and damage to Tenant's
property.
15. Alterations. Tenant shall make no structural or system changes or
modifications in or to the Demised Premises of any nature without Landlord's
prior written consent. Subject to the provisions of this Section 15, Tenant at
Tenant's expense, may make alterations, installations, additions or improvements
after the Lease Commencement Date which are nonstructural and which do not
affect utility services including, without limitation, the HVAC system and the
plumbing and electrical lines serving the Demised Premises. Any repairs,
replacements, alterations, installation and/or additions required or permitted
to be performed by Tenant under any provision of this Lease shall not be
commenced until plans and specifications therefor have been submitted to and
approved by Landlord. Such seek shall then be performed in accordance with such
approved plans and specifications and shall be performed only by contractors,
subcontractors and mechanics approved by Landlord and in a first-class manner
to Landlord's reasonable satisfaction and shall be done in a manner which will
ensure labor harmony within the Building. If Landlord grants Landlord's consent
to the making of alterations or improvements by Tenant, such consent is solely
for Landlord's benefit, and without any representation or warranty whatsoever to
Tenant with respect to the adequacy or correctness of Tenant's plans and
specifications.
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If Landlord requires any changes, Tenant shall cause the plans and
specifications to be revised in accordance with Landlord's requirements and
shall resubmit the same to Landlord for Landlord's review. All fixtures and
paneling, partitions, railings and other improvements installed or affixed to
the Demised Premises by or at the request of Tenant, shall become the property
of Landlord and shall remain upon and be surrendered with the Demised Premises
unless Landlord, by notice to Tenant no later than twenty (20) days prior to the
date fixed as the termination of this Lease, elects to have any items (other
than Landlord's Work) removed by Tenant, in which event, the same shall be
removed from the Demised Premises by Tenant forthwith, at Tenant's expense.
Nothing contained in this Section 15 shall be construed to prevent Tenant's
removal of Tenant's own business or trade fixtures, but upon removal of any such
business or trade fixtures from the Demised Premises or upon removal of other
installations as may be required by Landlord, Tenant shall immediately and at
Tenant's expense, repair and restore the Demised Premises to the condition
existing prior to installation, ordinary wear and tear excepted, and repair any
damage to the Demised Premises or the Building due to such removal. All property
permitted or required to be removed by Tenant at the expiration of the Term
remaining in the Demised Premises after Tenant's vacating of the Demised
Premises shall be deemed abandoned and may, at the election of Landlord, either
be retained as Landlord's property or may be removed by Landlord at Tenant's
expense. Tenant shall, before making any alterations, additions, installations
or improvements, at its expense, obtain all permits, approvals and certificates
required by any governmental or quasi-governmental bodies and (upon
completion) certificates of final approval thereof and shall promptly deliver
duplicates of all such permits, approvals and certificates to Landlord and
Tenant agrees to carry workman's compensation (in full compliance with all
applicable law) and such general liability, personal and property damage
insurance as Landlord may reasonably require. If any mechanic's lien is filed
against the Demised Premises or the Building for work claimed to have been done
for (or materials furnished to) Tenant, then the same shall be discharged by
Tenant within ten (10) days thereafter, at Tenant's expense, by filing the bond
required by law, regardless of whether Tenant disputes any such claim.
16. Repairs. Landlord shall, throughout the Term, maintain and repair the basic
structure and public portions of the Building, both exterior and interior,
including (without limitation), all load bearing walls and the roof and all
plate glass. Landlord shall insure, light, repair, keep and otherwise maintain
all portions of the public lobby and stairways within the Building and the
sidewalks, parking areas, curbs, passageways, and boardwalk areas adjoining or
appurtenant to the Building. Tenant shall, throughout the Term, take good care
of the interior of the Demised Premises and Tenant's fixtures and appurtenances
therein and at Tenant's cost and expense, shall make all non-structural repairs
thereto as and when needed to preserve them in good working order and condition,
reasonable wear and tear, obsolescence and damage from the elements, fire or
other casualty excepted. Notwithstanding the foregoing, all damage or injury to
the Demised Premises or to any other part of the Building, including plate
glass, or to the Building's fixtures, equipment and appurtenances, whether
requiring structural or non-structural repairs, approximately caused by or
resulting from carelessness, omission, neglect or improper conduct of Tenant,
Tenant's invitees, clients or licensees, shall be repaired promptly by Tenant at
Tenant's sole cost and expense, to the satisfaction of Landlord. Tenant shall
also promptly repair all damage to the Building and the Demised Premises
approximately caused by the moving of Tenant's fixtures, furniture or equipment.
All repairs by Tenant shall be of quality or class equal to the original work or
construction. If Tenant fails after ten (10) business days' written notice to
proceed with due diligence to make any repairs required to be made by Tenant
hereunder, the same may be made by Landlord at the expense of
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Tenant and such expense shall be collectible as Additional Rent hereunder
immediately upon rendition of a bill or statement thereof. Tenant shall deliver
to Landlord prompt notice of any defective condition in any plumbing, HVAC
system or electrical lines located in, servicing or passing through the Demised
Premises and following such notice, Landlord shall remedy the condition with
reasonable diligence but at the expense of Tenant if the repairs are
necessitated by damage or injury attributable to Tenant, or to Tenant's clients,
invitees or licensees. Landlord shall pay for all repairs necessitated or caused
by damage or injury attributable to Landlord, Landlord's servants, agents,
employees and contractors. Landlord shall assign to Tenant all warranties or
guaranties applicable to Landlord's Work which are assignable, to the extent
Tenant has any responsibilities in connection with the warranted or guaranteed
work. There shall be no allowance to Tenant for a diminution of rental value and
no liability on the part of Landlord by reason of inconvenience, annoyance or
injury to business arising from Landlord making or failing to make any repairs,
alterations, additions or improvements in or to any portion of the Building or
the Demised Premises or in and to the fixtures, appurtenances or equipment
thereof provided that Tenant is not materially inconvenienced thereby for a
period in excess of ten (10) business days.
17. Operating Expenses.
Operating Expenses shall mean and include those charges incurred in respect to
the management, repair, operation and maintenance of the Building and the
Property in any calendar year or portion thereof including any and all of the
following: salaries, wages, hospitalization, medical, surgical and general
employee benefits (including group life insurance) and pension payments of
employees of Landlord engaged in the operation and maintenance of the Building
and Property, payroll taxes, worker's compensation insurance, utility usage
surveys, utility taxes, water (including sewer rental), heating, ventilating and
air conditioning, premiums for insurance of the kind normally carried by owners
of similar properties (including insurance in case of fire or casualty against
loss of up to eighteen (18) monthly installments of fixed rental income from the
Property) or if there be any mortgage of the Building, or the Property, or both,
as may be required by the holder of such mortgage; or also as elsewhere
required herein, repairs and maintenance, building and cleaning supplies,
uniforms and dry cleaning, window cleaning, management fees, landscaping, snow
and ice removal, accounting and other miscellaneous administrative expenses, the
cost of all supplies, tools, materials and equipment, depreciation of hand tools
and other movable equipment used in the repair, operation or maintenance of the
Building, service contracts with independent contractors, telephone charges, and
a pro rata share (reasonably based on use and square footage) of any expenses
incurred in connection with common area charges or costs benefiting the Building
and which may be shared with other facilities, utilities or improvements
relating to the Building and the Property and all other similar and customary
expenses paid in connection with the operation and maintenance of the Building
and the Property. Operating Expenses shall not include: (i) expenses for repairs
or other work occasioned by fire or other insured casualty; (ii) expenses
incurred in leasing or procuring new tenants or refitting existing space for new
tenants; (iii) rental under any ground or underlying leases; (iv) depreciation
or amortization; (v) expenditures for capital improvements other than as
described below; (vi) wages, salaries, or other compensation paid to any
director, officer or executive employee of Landlord above the grade of Building
superintendent; (vii) principal and interest payments on mortgage financing;
(viii) Landlord's Electrical Expense as defined in Section 19; (ix) amounts
which may be the specific obligation of other tenants within the Building; and
(x) Landlord's income or corporate taxes. Notwithstanding the foregoing, if
during the Term, Landlord shall make a capital expenditure necessary or
desirable, in the opinion
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of the Landlord, to meet the requirements of applicable laws or designed to
increase the operating efficiency of the Buildings or to save on Operating
Expenses or to replace obsolete operating equipment, there shall be included in
Operating Expenses for the year in which the capital expenditure was made and in
each succeeding year, an annual charge of such capital expenditure. The annual
charge shall be determined by dividing the original capital expenditure plus a
reasonable interest factor by the number of years of useful life of the capital
expenditure. The useful life shall be determined by Landlord in accordance with
generally accepted accounting principles.
For each calendar year of the Term (or any fraction thereof) if the projected
Operating Expenses shall exceed the actual Operating Expenses paid by Landlord
during the Base Year (an "Operating Expense Increase") then Tenant shall pay as
Additional Rent a sum equal to Tenant's Proportionate Share of Operating Expense
Increases multiplied by the Operating Expense Increase. At the commencement of
each calendar year during the Term, commencing January 1, 1996 and at all times
based upon an assumed ninety (90%) percent occupancy of the Building (whether or
not such is the case) Landlord shall project the Operating Expenses payable
during such year, and shall deliver Tenant notice thereof, together with
reasonable backup documentation to substantiate the amount of any increase, and
on the first (1st) day of the calendar month in question and on the first (1st)
day of each month thereafter during such year, Tenant shall pay to Landlord
one-twelfth (1/12) of the Additional Rent calculated pursuant to this Section 17
(b) Within sixty (60) days of the end of each calendar year, Landlord shall
calculate the actual Operating Expenses paid during the immediately preceding
year, and shall notify Tenant of the same (and shall provide reasonable backup
documentation substantiating Landlord's calculations) and if the actual
Operating Expenses were greater than the projected Operating Expenses, Tenant
shall pay to Landlord the balance within thirty (30) days of receiving
Landlord's notice, and in the event that the actual Operating Expenses were less
than the projected Operating Expenses, Landlord shall credit the amount owed to
Tenant against the next installment or installments (as appropriate) of
Additional Rent payable by Tenant pursuant to this Section 17(b).
In the event Landlord leases any portion of the Building on a triple net lease
basis so that Landlord shall not be obligated to provide all of the services for
which charges are incurred pursuant to this Section 17, Tenant's Proportionate
Share of Operating Expense Increases shall be adjusted to reflect the ratio of
(i) Tenant's Rentable Square Footage to (ii) the total rentable square footage
of the Building minus the rentable square footage of any triple net lease
tenants. Any payments to Landlord by triple net lease tenants for services
incurred pursuant to this Section 17 shall reduce Landlord's Operating Expense
for the year in question.
Every notice given by Landlord pursuant to this Section 17 shall be conclusive
and binding upon Tenant unless within thirty (30) days after the receipt of such
notice Tenant shall notify Landlord that tenant disputes the correctness of the
notice, specifying the particular respects in which the notice is claimed to be
incorrect, and if such dispute shall not have been settled by agreement within
sixty (60) days, the dispute shall be submitted to arbitration in accordance
with the then existing rates of the American Arbitration Association. Pending
the determination of such dispute by agreement or arbitration as aforesaid,
Tenant shall pay Additional Rent in accordance with Landlord's notice, provided
that such payment shall be without prejudice to Tenant's right to dispute the
same.
Exhibit 5, attached hereto and made a part hereof, represents Landlord's
anticipated Base Year Operating Expenses. However, it is hereby agreed,
stipulated and understood between Landlord and
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Tenant that Landlord has provided Tenant with such information by way of
courtesy only, and that all calculations to be made pursuant to this Section 17
shall be based upon the actual Operating Expenses paid by Landlord during the
Base Year, and that although the list of items therein contained represents
Landlord's good faith prediction of the expenses payable with respect to the
Property during the Base Year, the same may not be exhaustive and shall not be
construed as limiting those expenses which fall within the definition of
"Operating Expenses" pursuant to the provisions of Section 17(a) above.
18. Real Estate Taxes.
For the purposes of this Section 18, the expression "Real Estate Taxes" shall
mean the aggregate of all taxes, assessments, charges, transit taxes, excises,
levies, and any other government charges of any kind or nature, special,
ordinary or extraordinary, presently existing or created hereafter, foreseen or
unforeseen, which in any calendar year period may be assessed, levied,
confirmed, imposed upon or which may become a lien upon the Property, or which
may be assessed against Landlord in lieu of real estate taxes upon the Property,
and which become due and payable, for such calendar year.
If during the calendar year commencing January 1, 1995, and during each calendar
year of the Term thereafter (or any fraction thereof) the Real Estate Taxes paid
by Landlord shall exceed Real Estate Taxes paid during the Base Year, (a "Tax
Increase") Tenant agrees to pay Landlord, as Additional Rent, a sum equal to
Tenant's Proportionate Share of Tax Increases multiplied by the Tax Increase.
Landlord shall furnish to Tenant a copy of the Tax Assessor's report or reports
showing the assessment for the Property and the report or reports showing the
increased assessment therefor and all applicable tax bills, or such other
evidence coming from the Assessor's and/or Tax Collector's office which will
show the Real Estate Taxes involved or some other reasonable documentation of
the matter.
Any amount due to Landlord under the provisions of this Section 18 shall be
payable in equal monthly installments, commencing with the first (1st) day of
the month on which Landlord shall submit to Tenant a bill therefor.
Notwithstanding the foregoing, at such time as the Real Estate Taxes shall be
ascertained for the then current calendar year, the installments then becoming
due hereunder shall be increased by an amount sufficient to compensate Landlord
for any previous deficiencies in installments and thereafter the monthly
installments shall be increased pro-rata based with respect to the Real Estate
Taxes for the then current calendar year so that one (1) months prior to the
date that the Real Estate Taxes Fall due, Tenant's Proportionate Share of Tax
Increases shall be paid in full. Notwithstanding the foregoing, if any Real
Estate Taxes are payable in full before the expiration of the calendar year in
question, whether in installments or by a lump sum payment, the monthly payments
by Tenant shall be in such amount as to ensure that Landlord shall have all sums
due from Tenant hereunder with respect to such Real Estate Taxes one (1) month
prior to the date such payment falls due.
Payments required pursuant to this Section 18 with respect to Real Estate Taxes
for a calendar year containing a period of time not included in the Term, shall
be pro-rated by Landlord.
Landlord reserves the right, through available legal remedies, to contest the
validity of any Real Estate Taxes or the amount of the assessed valuation of the
Property or any portions thereof for any calendar year. If Landlord shall
receive any tax refund, remission, or abatement with respect to Real Estate
Taxes for any calendar year for which Tenant has paid Tenant's Proportionate
Share of Tax Increases, Landlord shall credit Tenant proportionately, after
first deducting therefrom the share of
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Landlord's cost and expense in procuring such refund, remission or abatement, as
proportionately attributed to the reimbursement due to Tenant. Tenant, at
Tenant's sole cost and expense, with the written consent of other tenants of the
Building occupying at least fifty (50%) percent of the total rentable square
footage of the Building (including Demised Premises), may undertake, by
appropriate proceedings, to review any assessments with respect to Real Estate
Taxes for any year occurring after the Lease Commencement Date. Any documents
required to enable Tenant to reasonably prosecute any such proceeding, shall be
executed and delivered by Landlord upon reasonable demand. If Landlord shall
receive any refund for any year as a result of any proceedings undertaken by
Tenant pursuant to this Section 17(e), Landlord shall reimburse Tenant for any
reasonable expenses incurred by Tenant in obtaining the same (including
reasonable attorneys' fees) and a proportion of the remaining sum (in accordance
with Tenant's Proportionate Share of Tax Increases) shall be paid to Tenant.
It is agreed and understand that nothing herein contained shall require Tenant
to pay municipal, state or federal income taxes assessed against Landlord, or
any municipal, state or federal capital levy, estate, succession, inheritance
or transfer taxes of Landlord, or corporation or franchise taxes imposed upon
any corporate owner of the fee simple title to the Property or any such part
thereof which includes the Demised Premises.
19. Electricity.
Except as hereinafter provided to the contrary, Landlord shall cause electricity
to be made available to the Demised Premises for the normal use of lighting and
for other items such as (but not limited to) lamps, typewriters and small office
equipment not requiring a separate circuit (small computers, copy machines and
fax machines included), and not for any other equipment or installations. As
Additional Rent hereunder, Tenant shall pay monthly, commencing with the Lease
Commencement Date, one-twelfth (1/12) of Tenant's Proportionate Share of
Electrical Expense (as defined in Section 1 above). Tenant shall always pay an
amount which is no less than one-twelfth (1/12) of the product of (i) the
Initial Electric Charge set forth in Section 1 above and (ii) Tenant's Rentable
Square Footage, which amount shall be payable from the Lease Commencement Date
unless and until increased pursuant hereto. In the event Landlord permits any
tenant in the Building to separately meter its electricity usage, Tenant's
Proportionate Share of Landlord's Electrical Expense shall be adjusted to
reflect the ratio of (i) Tenant's Rentable Square Footage to (ii) the total
rentable square footage of the Building minus the rentable floor area of any
separately metered tenants. Any payments to Landlord or to the appropriate
utility company by separately metered tenants attributable to electricity
consumption in any part of the Building and/or the Property shall directly
reduce Landlord's Electrical Expense accordingly, on a dollar for dollar basis.
Landlord shall not be liable in any way to Tenant for any failure or defect in
the supply or character of electricity furnished to the Demised Premises by
reason of any requirement, act or omission of the public utility serving the
Property with electricity or for any other reason not within the control of
Landlord. Landlord shall replace all lighting tubes, lights, bulbs and ballasts
required in the Demised Premises, at Tenant's expense.
All lighting, electrical and kitchen appliances and office equipment to be
initially installed in the Demised Premises shall be subject to Landlord's prior
written consent. Tenant's use of electricity in the Demised Premises shall not,
at any time, exceed the capacity of any of the electrical conductors and
equipment in or serving the Demised Premises. Tenant shall not, without
Landlord's prior consent in each instance, connect any additional or different
fixtures, appliances or equipment (other than lamps, typewriters, word
processors, copier machines, fax and telex machines and equipment not requiring
a separate circuit) to the
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Building's electricity distribution system or make any alteration or addition to
the electricity distribution system of the Demised Premises. All additional
risers or other equipment required in connection with any alterations made to
such electricity distribution systems on behalf of Tenant shall be provided by
Landlord and the cost thereof shall be paid by Tenant upon demand by Landlord.
If any additional fixtures, appliances or equipment (other than lamps,
typewriters, word processors, copier machines, fax and telex machines and small
office equipment not requiring a separate circuit) shall be connected to the
Building's electricity distribution system or any alteration or addition to the
electricity distribution system of the Demised Premises shall be made by or on
behalf of Tenant and if the Demised Premises are not separately metered,
forthwith upon the occurrence of any such events, Tenant's Proportionate Share
of Landlord's Electrical Expense shall be increased by an amount which will
reflect the additional electricity to be consumed by Tenant. If Landlord and
Tenant cannot agree thereon, the amount of such increase shall be determined by
a reputable, independent licensed electrical engineer, to be selected by
Landlord and reasonably acceptable to Tenant whose fees or charges shall be
included as Operating Expenses for the year in question. When the amount of such
increase is so determined, Tenant shall pay to Landlord, on demand, the amount
thereof retroactive to the date of the occurrence.
If Tenant requires the use of electricity during hours significantly greater
than the normal office hours referred to in Section 20 below, the same shall be
supplied by Landlord at the published rate therefor from time to time in effect.
The bill for such extra electricity will be billed by Landlord to Tenant as
Additional Rent hereunder.
If any tax is imposed upon Landlord with respect to electrical energy furnished
to Tenant by any federal, state or municipal authority, Tenant, unless
prohibited by law or by any governmental authority having jurisdiction
thereover, shall pay to Landlord, on demand, Tenant's pro rata share of any and
all such taxes.
It is agreed and understood, that at Landlord's election, or if requested in
writing by tenants leasing more than fifty (50%) percent of the total rentable
square footage of the Building, Landlord shall engage a qualified consultant to
survey electricity usage. Those tenants consuming more than their proportionate
share thereof shall pay an additional monthly charge to cover each such tenant's
excess consumption. Costs of the survey and the consultant shall be included as
the Operating Expenses for the year in question.
20. Services Provided by Landlord. For so long as Tenant is not in default under
any of the covenants of this Lease, Landlord shall provide: (a) full elevator
service; (b) central heating, ventilating and air conditioning ("HVAC") to the
Demised Premises when and as required on business days (holidays excepted) from
7 a.m. to 7 p.m. (weekdays) or 7 a.m. to 12 noon on Saturdays (and for more
extended hours or on Saturday afternoon, Sundays or holidays at Landlord's
published cost therefor from time to time in effect, which is $25.00 per hour at
the date hereof); (c) water for ordinary lavatory and pantry purposes, but if
Tenant uses or consumes water for any other purpose or otherwise consumes
unusual quantities, Landlord may install a water meter at Tenant's expense
(which Tenant shall thereafter maintain in good working order and repair at
Tenant's expense) to register such water consumption and Tenant shall pay
Landlord for water consumed as shown on said meter as Additional Rent as and
when bills are rendered; (d) cleaning service for the common areas of the
Building and the Demised Premises on business days (holidays excepted) as more
specifically set forth in Exhibit 3 attached hereto and made a part hereof,
provided that Tenant shall pay Landlord the cost of removal of any of Tenant's
refuse and rubbish in excess of normal amounts for the average tenant in the
Building and for special cleaning services or
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cleaning services in excess of those set forth in said Exhibit 3; and (e)
security systems and personnel for the Building commensurate with that offered
in comparable office buildings in Stamford, Connecticut. Landlord reserves the
right to stop providing heating, elevators, plumbing, air conditioning, electric
power, cleaning or any other services, when necessary due to accident or for
repairs, alterations, replacements or improvements necessary or desirable in the
reasonable judgment of Landlord, for as long as may be reasonably required by
reason thereof or by reason of strikes, accidents, laws, orders or regulations
or any other reason beyond the control of Landlord, and in any such case,
Tenant shall not be entitled to any abatement of Rent or any other offset
whatsoever.
21. Signs. Tenant shall not place any sign upon or adjacent to the Demised
Premises, without the express written consent of Landlord. If Tenant shall cause
or permit any other sign to be attached to any part of the Building not within
the Demised Premises or which is visible from the exterior of the Demised
Premises without Landlord's written permission, Landlord shall have the right,
in addition to any other rights or remedies without notice or liability to
Tenant, to remove and dispose of any such sign or other object and to make any
repairs necessitated by any such removal, all at Tenant's sole cost and expense,
and Landlord's cost and expense in performing such removal and repair shall be
deemed Additional Rent hereunder, payable together with the next installment of
Fixed Rent due hereunder.
22. Exculpation. Notwithstanding any other provision herein contained, Tenant
shall look solely to Landlord's interest in the Property for the satisfaction of
Tenant's remedies for the collection of a judgment (or other judicial process)
requiring the payment of money by Landlord in the event of any default or breach
by Landlord with respect to any of the terms, covenants and conditions of the
Lease to be observed and/or performed by Landlord, and no other property or
assets of the Landlord shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies with respect to this Lease
or in connection with Tenant's occupancy or use of the Demised Premises.
23. No Representations by Landlord. Neither Landlord nor Landlord's agents have
made any representations or promise with respect to the physical condition of
the Building, the Property or the Demised Premises, except as hereby expressly
set forth and no rights, easements or licenses are acquired by Tenant by
implication or otherwise except as expressly set forth in the provisions of this
Lease. Tenant has inspected the Building and the Demised Premises and is
thoroughly acquainted with their condition.
24. Brokers. Tenant represents that there was no broker instrumental in
consummating this Lease other than the Brokers set forth in Section 1 above.
Tenant agrees to hold Landlord harmless from and against any and all claims or
demands for brokerage commissions arising out of or in connection with the
execution of this Lease based on conversations or negotiations with Tenant on
the part of any broker other than the Brokers. Landlord will pay a full
commission to Pierson & Smith Real Estate.
25. End of Term. Upon the expiration or other termination of the Term, Tenant
shall quit and surrender to Landlord the Demised Premises, broom clean, in good
order and condition, ordinary wear and tear excepted, and Tenant shall remove
all its property. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this Lease. If the last day of
the Term or any Extension Period falls on Sunday, this Lease shall expire at
noon on the preceding Saturday unless it is a legal holiday in which case it
shall expire at noon on the preceding business day.
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26. Default.
The following shall be events of default under this Lease: (i) if Tenant
defaults in payment of Rent for a period of ten (10) days after any payment or
installment of Rent shall become due and payable; (ii) if Tenant defaults in the
performance of any other term, covenant, condition or obligation of Tenant under
this Lease and fails to cure such default within a period of twenty (20) days
after notice from Landlord specifying such default, or if such default specified
by Landlord is not curable within such twenty (20) day period, if Tenant fails
within three (3) days after such notice from Landlord to commence to cure such
default or thereafter fails diligently to pursue completion of such cure during
and after such thirty (30) day period; (iii) if Tenant abandons or vacates any
portion of the Demised Premises; (iv) if Tenant makes any transfer, assignment,
conveyance, sale, pledge or disposition of all or a substantial portion of
Tenant's property, or removes a substantial portion of Tenant's Property from
the Demised Premises other than by reason of any assignment permitted under this
Lease; (v) if Tenant's interest herein is sold under execution; (vi) if Tenant
shall file a voluntary petition pursuant to the United States Bankruptcy Code,
as amended from time to time (the "Bankruptcy Code") or any successor thereto,
or shall take the benefit of any insolvency act or law or be dissolved, or if an
involuntary petition is filed against Tenant pursuant to the Bankruptcy Code or
any successor thereto and said petition is not dismissed within thirty (30) days
after such filing; (vii) if a receiver shall be appointed for Tenant's business
or assets or any of them and the appointment of such receiver is not vacated
within thirty (30) days after such appointment; or (viii) if Tenant shall make
an assignment for the benefit of Tenant's creditors.
Upon the occurrence of any such event of default, Landlord may without prejudice
to its other rights hereunder, or at law, do any one or more of the following:
(i) terminate this Lease and reenter and take possession of the Demised
Premises; (ii) without such re-entry, recover possession of the Demised
Premises in the manner prescribed by any statute relating to summary process,
and any demand for the Rent, re-entry for condition broken, and any and all
notices to quit; or (iii) declare immediately due and payable all the remaining
installments of the Rent and such amount, less the fair rental value of the
Demised Premises for the remainder of the Term, which shall be construed as
liquidated damages and shall constitute a debt provable in bankruptcy or
receivership. Upon recovery of possession of the Demised Premises, Landlord may
relet the Demised Premises as Landlord may see fit without thereby avoiding or
terminating this Lease, and for the purpose of such reletting, Landlord is
authorized to make such repairs to the Demised Premises as may be necessary in
the reasonable opinion of Landlord, for the purpose of such reletting, and if a
sufficient sum is not realized from such reletting (after payment of all costs
and expenses of such repairs and the expense of such reletting and the
collection of rent accruing therefrom) each month to equal the Rent, then Tenant
shall pay such deficiency each month upon demand therefor.
After default by Tenant, the acceptance of the Rent or failure to re-enter by
Landlord shall not be held to be a waiver of Landlord's right to terminate this
Lease, and Landlord may re-enter and take possession of the Demised Premises as
if no Rent had been accepted after such default. All of the remedies given to
Landlord in this Lease following an event of default by Tenant are in addition
to all other rights or remedies which Landlord may be entitled under the laws of
the State of Connecticut. Any and all remedies given to Landlord hereunder or by
law by reason of Tenant's default hereunder shall be deemed cumulative and the
election of one shall not be deemed a waiver of any other or further rights or
remedies.
Notwithstanding the foregoing, if Tenant shall default (i) in the payment of any
Rent (Fixed or Additional) and any such default
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shall continue for ten (10) days and be repeated for a total of three times in
any period of twelve (12) months or (ii) in the performance of any other
material covenant of this Lease for ten (10) days after delivery to Tenant of a
written notice of default and such default shall be repeated more than three (3)
times in any period of twelve (12) months, then, notwithstanding that such
defaults shall have been cured after the notice period, any further similar
default shall be deemed to be deliberate and an immediate event of default and
Landlord thereafter may serve a three day notice of termination without
affording Tenant an opportunity to cure such further similar default and
Landlord may, without notice, re-enter the Demised Premises, by summary
proceedings or otherwise, and remove Tenant's effects and hold the same as if
this Lease had not been made. If Tenant shall default hereunder prior to the
commencement of an Extension Period, Landlord may promptly cancel and terminate
Tenant's election to take such Extension Period upon written notice to Tenant.
27. Additional Default Remedies. It is hereby agreed that in the event of the
termination of this Lease pursuant to the provisions of Section 26 above, and
without prejudice to the provisions of Section 29 below, Landlord may, at
Landlord's option, recover from Tenant as and for liquidated damages with
respect thereto, an amount equal to the Rent reserved hereunder for the
unexpired portion of the Term, except that such sum shall in no event exceed a
sum equal to thirty-six (36) months of Rent. In the event that Tenant shall pay
such a liquidated sum in damages and thereafter, the Demised Premises are
re-let, then Landlord agrees that upon the date which would have been the
expiration of the Term (the "Expiration Date") Landlord shall pay to Tenant a
sum equal to the net rent actually received by Landlord (exclusive of any
escalation payments, tax payments, operating costs payments, electricity
payments and the like) from the date of such termination up to the Expiration
Date, less any and all reasonable expenses of any type, or nature incurred by
Landlord in connection with the reletting of the Demised Premises whether
foreseen or unforeseen and whether ordinary or extraordinary as reasonably
determined by Landlord, provided, however, that such payment shall in no event
exceed the amount of liquidated damages actually paid by Tenant as aforesaid or
the amount of actual damages suffered by Landlord. Nothing herein contained
shall, however, limit or prejudice the right of Landlord to prove for and obtain
as liquidated damages by reason of any such termination an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, (and
governing the proceedings in which) such damages are proved, whether or not such
amount be greater than, equal to, or less than the amount referred to above.
28. Effect of Re-entry. Following any such re-entry, expiration and/or
dispossession by summary proceedings or otherwise (a) the Rent shall become due
and be paid up to the time of such re-entry dispossess and/or expiration,
together with such expenses as Landlord may incur for legal expenses, attorneys'
fees, brokerage, and/or putting the Demised Premises in good order, or for
preparing the same for re-rental; (b) Landlord may re-let the Demised Premises
or any part or parts thereof, either in the name of Landlord or otherwise, for a
term or terms which may, at Landlord's option be less than or exceed the period
which would otherwise have constituted the balance of the Term and may grant
concessions or free rent or charge a higher rental than that in this Lease,
and/or (c) Tenant or the legal representatives of tenant shall also pay to
Landlord, as liquidated damages, for the failure of Tenant to observe and
perform said Tenant's covenants herein contained, any deficiency between the
Fixed Rent and the net amount, if any, of the rents collected on account of any
new lease of leases of the Demised Premises for each month of the period which
would otherwise have constituted the balance of the Term. The failure or
inability of Landlord to re-let the Demised Premises or any part or parts
thereof shall not release or affect Tenant's liability for damages. In computing
such liquidated damages there shall be added to such
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deficiency such expenses as Landlord may incur in connection with re-letting,
including legal expenses, attorneys' fees, brokerage, advertising, and all
expenses incurred in keeping the Demised Premises in good order or preparing the
same for reletting. Any such liquidated damages shall be paid in monthly
installments by Tenant on the days specified in for payment of Rent in this
Lease. Landlord, in putting the Demised Premises in good order or preparing the
same for re-rental may, at Landlord's option, make such alterations, repairs,
replacements, and/or decorations as Landlord deems appropriate or necessary but
the same shall not operate and be construed to release Tenant from liability
hereunder. Landlord shall in no event be liable in any way whatsoever for
failure to re-let the Demised Premises, so long as Landlord uses reasonable
efforts to do so, or in the event the Demised Premises are re-let, for failure
to collect the rent thereof under such re-letting, and in no event shall Tenant
be entitled to receive any excess, if any, of such net rents collected over the
Rent payable hereunder. In the event of a breach or threatened breach by Tenant
of any of the covenants or provisions hereof, Landlord shall have the right of
injunction and the right to invoke any remedy allowed at law or in equity as if
re-entry, summary proceeding and other remedies were not herein provided for.
Mention in this Lease of any particular remedy shall not preclude Landlord from
any other remedy in law or in equity. Tenant hereby expressly waives any and all
rights of redemption granted by or under any present or future laws in the
event of Tenant being evicted or dispossessed for any cause, or in the event of
Landlord obtaining possession of the Demised Premises by reason of the violation
by Tenant of any of the covenants and conditions of this Lease.
29. Fees and Expenses.
Regardless of any other right or remedy of Landlord following an event of
default, if Tenant shall fail to perform a non-monetary covenant hereunder,
Landlord may immediately, or at any time thereafter and without notice, perform
the same for the account of Tenant, and if Landlord makes any expenditures or
incurs any obligations for the payment of money, in connection therewith
including (but not limited to) reasonable attorneys' fees in instituting,
prosecuting or defending any action or proceeding such sums paid or obligations
incurred, together with interest and costs shall be deemed to be Additional Rent
hereunder and shall be paid by Tenant to Landlord within ten (10) days of
rendition of any bill or statement to Tenant thereof.
If any payment of Rent (Fixed or Additional) is in default, Tenant shall pay to
Landlord, as Additional Rent, an amount equal to five (5%) percent of the amount
in default as compensation for Landlord's extra administrative costs in
investigating and collecting such late Rent payment. Further, if payment of any
Rent is not made within ten (10) days after the same shall become due, Tenant
shall pay as Additional Rent hereunder, interest on the sum from the date it
became due until it is paid, at an annual rate which shall be four (4%) percent
in excess of the then current "Prime Rate", as announced in the Wall Street
Journal, from time to time, provided, however, in no event shall such interest
rate be in excess of the highest rate of interest which from time to time shall
be permitted under the laws of the State of Connecticut to be charged on late
payments of sums of money due pursuant to the terms of a lease. All charges
payable pursuant to this Section 29(b) shall be payable on demand and without
prejudice to any of Landlord's other rights and remedies hereunder. No failure
by Landlord to insist upon the strict performance by Tenant of Tenant's
obligations under this Section 29(b) shall constitute a waiver by Landlord of
Landlord's right to enforce the same in the future and the provisions of this
Section 29(b) shall not be construed as extending any applicable cure period.
Except as otherwise provided herein, in the event that Tenant requests Landlord
to review, approve or prepare documentation for
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any reason relating to this Lease, Tenant shall reimburse Landlord for all of
Landlord's reasonable expenses relating thereto, including attorneys' fees and
administrative charges.
30. Bankruptcy and Insolvency. If at any time during the Term there shall be
filed by or against Tenant in any court pursuant to any statute either of the
United States or of any state, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of all or a
portion of Tenant's property, and within ninety (90) days thereof, Tenant fails
to secure a stay or dismissal thereof, or if Tenant makes an assignment for the
benefit of creditors or petitions for or enters into an arrangement, this Lease,
at the option of Landlord, exercised within a reasonable time after notice of
the happening of any or more of such events, may be cancelled and terminated
upon ten (10) day's advance written notice to the Tenant of such cancellation,
and thereafter, neither Tenant nor any person claiming through or under Tenant
by virtue of any statute or any order of any court, shall be entitled to
possession or to remain in possession of the Demised Premises but shall
forthwith quit and surrender the same, and Landlord, in addition to the other
rights and remedies Landlord may have by virtue of any other provision in this
Lease contained or by virtue of any statute or rule of law, may retain as
liquidated damages, the Security Deposit and any Rent received from Tenant or
from others on behalf of Tenant, to the extent enforceable at law, but not to
the extent that the same is greater than the damages actually suffered by
Landlord. It is stipulated, agreed and understood that in the event of the
termination of this Lease pursuant to this Section 30, Landlord shall forthwith
be entitled to recover from Tenant as liquidated damages an amount equal to the
difference between the Fixed Rent reserved hereunder for the unexpired portion
of the Term and the fair and reasonable rental value of the Demised Premises for
the same period. In the computation of such damages, the difference between any
installment of Fixed Rent becoming due hereunder after the date of termination
and the fair and reasonable rental value of the Demised Premises for the period
for which such installment was payable shall be discounted to the date of
termination at the rate per annum then published in the Wall Street Journal as
the "Prime Rate". If the Demised Premises or any part thereof shall be relet by
the Landlord for the unexpired portion of the Term (or any part thereof) before
presentation of proof of such liquidated damages to any court, commission or
tribunal, the amount of rent reserved upon such re-letting shall be deemed to be
the fair and reasonable rental value for that part of the Demised Premises so
re-let during the term of re-letting. Nothing herein contained shall limit or
prejudice the right of the Landlord to prove for and obtain as liquidated
damages by reason of such termination, an amount equal to the maximum allowed by
any statute or rule of law in effect at the time when (and governing the
proceedings in which) such damages are to be proved, whether or not such amount
be greater, equal to, or less than the amount of the difference referred to
above.
31. Holding Over.
If Tenant retains possession of the Demised Premises or any part thereof after
the expiration of the Term, Tenant's occupancy of the Demised Premises shall be
as a tenant at will, terminable at any time by Landlord. Tenant shall pay
Landlord for Tenant's use and occupancy of the Demised Premises during such
period a Rent equal to two hundred (200%) percent of the total amount of the
Rent payable hereunder for the month immediately preceding the expiration of the
Term, and, in addition thereto, shall pay Landlord for all damages sustained by
reason of Tenant's retention of possession. The provisions of this Section 31
shall not exclude Landlord's rights of re-entry or any other right hereunder or
at law or in equity.
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32. Waiver of Trial by Jury. Landlord and Tenant hereby waive trial by jury in
any action proceeding or counterclaim brought by either Landlord or Tenant
against the other (except for personal injury or property damage) with respect
to any matters whatsoever arising out of or in any way connected with this
Lease, including the relationship of Landlord and Tenant, or Tenant's use of or
occupancy of the Demised Premises, or any emergency statutory or any other
statutory remedy.
33. No Waiver. The failure of Landlord to seek redress for violation of, or
to insist upon the strict performance of any covenant or condition of this Lease
or of any of the Rules or Regulations herein set forth or hereafter adopted,
shall not prevent a subsequent act which would have originally constituted a
violation from having all the force and effect of an original violation. The
receipt by Landlord of any portion of the Rent with knowledge of the breach of
any covenant of this Lease shall not be deemed a waiver of such breach and no
provision of this Lease shall be deemed to have been waived by Landlord unless
such waiver be in writing signed by the Landlord. No payment by Tenant or
receipt by Landlord of a lesser amount than the Rent herein reserved shall be
deemed to be other than a partial payment on account of the same and any
endorsement or statement on any check or any letter accompanying any check for
less than the full amount of the Rent shall not in any event be deemed an accord
and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of the Rent or pursue any
other remedy provided for in this Lease. No act or thing done by Landlord or
Landlord's agents during the Term shall be deemed an acceptance of a surrender
of the Demised Premises and no agreement to accept such surrender shall be valid
unless in writing signed by Landlord. No employees of Landlord or of Landlord's
agent shall have any power to accept the keys of the Demised Premises prior to
the termination of this Lease and the delivery of keys to any such agent or
employee shall not operate as a termination of this Lease or a surrender of the
Demised Premises.
34. Bills and Notices. Unless as otherwise provided in this Lease, a bill,
statement, notice or communication which Landlord may desire or be required to
give to Tenant, shall be deemed sufficiently given or rendered if, in writing,
delivered to Tenant personally or sent by registered or certified mail addressed
to tenant at the Demised Premises or at the last known residence address or
business address of Tenant or left at any of said locations addressed to Tenant
and the time of the rendition of such bill or statement and of the giving of
such notice or communication shall be deemed to be the time when the same is so
delivered, mailed, or left. Any notice by Tenant to Landlord must be served by
registered or certified mail addressed to Landlord at the address first herein
above given or at such other address as Landlord shall designate by written
notice.
35. Access to Demised Premises. Landlord or Landlord's agents shall have the
right (but shall not be obligated, except as otherwise set forth) to enter the
Demised Premises at any time in the case of an emergency, and, at other
reasonable times, to examine the same and to make such repairs, replacements and
improvements to the Demised Premises as Landlord may deem necessary and
reasonably desirable or to any other portion of the Building or as Landlord may
elect to perform following Tenant's failure to make repairs or perform any work
which Tenant is obligated to perform under this Lease, or for the purpose of
complying with laws, regulations and other directions of governmental
authorities. Tenant shall permit Landlord to use and maintain and replace pipes
and conduits in and through the walls and above the ceilings of the Demised
Premises and to erect new pipes and conduits therein. Landlord may, during the
progress of any work in the Demised Premises, take all necessary materials and
equipment into same without such action constituting an eviction nor shall the
Tenant be entitled to any abatement of Fixed Rent while such work is in
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progress nor to any damages by reason of loss or interruption of business or
otherwise. Throughout the Term, Landlord shall have the right to enter the
Demised Premises at reasonable hours for the purpose of showing the same to
prospective purchasers or mortgagees of the Building or the Property, and during
the last six months of the Term, for the purpose of showing the same to
prospective purchaser. If Tenant is not present to open and permit an entry into
the Demised Premises in an emergency, Landlord or Landlord's agents may enter
by master key or forcibly and, provided reasonable care is exercised to
safeguard Tenant's property, such entry shall not render Landlord or its agents
liable therefor, nor in any event shall the obligations of Tenant hereunder be
affected, except for damage or injury to property caused by Landlord's (or
Landlord's servants', agents' and employees') negligent, illegal or willfully
tortuous acts, taking into account all of the circumstances. If during the last
month of the Term, Tenant shall have removed all or substantially all of
Tenant's property therefrom, Landlord may immediately enter the Demised Premises
and alter, renovate and redecorate without limitation or abatement of Fixed
Rent, or liability to Tenant for any compensation and such act shall have no
other effect on this Lease or Tenant's obligations hereunder. Landlord shall
have the right at any time, without the same constituting an eviction and
without incurring liability to Tenant, to change the arrangement and/or location
of public entrances, passageways, doors, doorways, corridors, elevators, stairs,
toilets, or other public part or parts of the Building and to change the name,
number or designation by which the Building may be known.
36. Captions. The Captions contained in this Lease are inserted only as a matter
of convenience and for reference and in no way define, limit or describe the
scope of this Lease nor the intent of any provisions herein contained.
37. Restrictions. The words "re-enter" and "re-entry" as used in this Lease
are not restricted to their technical meaning. The term "business days" as used
in this Lease shall exclude Saturdays, Sundays and all days observed by the
State or Federal Government as legal holidays and those designated as holidays
by the union or union to which Landlord's employees (from time to time) may
belong.
38. Rules and Regulations. Tenant and Tenant's servants, employees, agents,
visitors and licensees shall observe and comply with the Rules and Regulations,
with respect to the Building as the same are attached hereto as Exhibit 4 and
made a part hereof, and such other and further reasonable rules and regulations
as Landlord or Landlord's agents may from time to time adopt and deliver notice
of to Tenant, provided the same do not unreasonably interfere with the
Represented Use or result in a material increase in operating Expenses. Any
right to dispute the reasonableness of any additional rule or regulation upon
Tenant's part shall be deemed waived unless the same shall be asserted by
service of a notice, in writing upon Landlord within ten (10) business days
after Landlord's notice thereof. Landlord shall not be liable to Tenant for
violation of the Rules and Regulations by any other or by such tenant's
servants, employees, agents, visitors or licensees.
39. Quiet Enjoyment. Landlord covenants and agrees that upon Tenant promptly
paying the Rent and observing and performing all the terms, covenants and
conditions on Tenant's part to be observed and performed, Tenant may peaceably
and quietly have, hold and enjoy the Demised Premises for the Term, including
appurtenances thereto such as common areas and the Parking Spaces, subject
nevertheless, to the terms, covenants and conditions of this Lease and to any
ground lease, underlying leases and mortgages. Landlord covenants that Landlord
is the court appointed receiver of the Demised Premises and has authority to
lease the Demised Premises to Tenant under the terms of this Lease and that so
long as Tenant shall pay the Rent and shall keep, observe and perform all of the
other covenants of this Lease, Tenant shall and may peaceably and
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quietly have, hold and enjoy the Demised Premises during the Term, free of
interference from Landlord or those claiming through or under Landlord, subject
nonetheless to the terms and conditions of this Lease. This covenant shall be
construed as running with the Demised Premises to and against subsequent owners
and successors in interest, and is not, nor shall it operate or be construed as,
a personal covenant of Landlord, except to the extent of Landlord's interest in
the Demised Premises and only so long as such interest shall continue, and
thereafter this covenant shall be binding only upon such subsequent owners and
successors in interest, to the extent of their respective interests, as and when
they shall acquire the same, and only so long as they shall retain such
interest.
40. Successors and Assigns. Without prejudice to Tenant's obligations pursuant
to the provisions of Section 7 above, this Lease shall be binding on the
parties, their heirs, administrators, executors, successors and assigns.
41. Security Deposit. Tenant has deposited with Landlord an amount equal to two
months of Fixed Rent as security for the faithful performance and observance by
Tenant of the terms, provisions and conditions of this Lease (the "Security
Deposit"). It is agreed that in the event Tenant defaults with respect to any of
the terms, provisions and conditions of this Lease, including (but without
limitation) the payment of Rent, Landlord may, if the default is not cured
within a period of thirty (30) days after service of a written notice of default
on Tenant, use, apply or retain the whole or any part of the Security Deposit to
the extent required for the payment of same or any other sum as to which Tenant
is in default or for any sum which Landlord may expend or may be required to
expend by reason of Tenant's default with respect to any of the terms, covenants
and conditions of this Lease, including, but not limited to, any damages or
deficiency in re-letting of the Demised Premises, whether such damages or
deficiency accrued before or after summary proceedings or other reentry by
Landlord. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants, and conditions of this Lease, the Security
Deposit shall be returned to Tenant at the expiration of the Term, following
surrender of possession of the Demised Premises to Landlord. In the event of a
sale of the Property or the Building or the leasing of the Building, Landlord
shall have the right to transfer the Security Deposit to the purchaser or lessee
and Landlord shall thereupon be released by Tenant from all liability for the
return of the Security Deposit and Tenant agrees to look solely to the new
landlord solely for the return of the Security Deposit, and it is agreed that
the provisions hereof shall apply to every transfer or assignment made of the
Security Deposit to a new landlord. Tenant further covenants that Tenant will
not assign or encumber the Security Deposit and that Landlord shall not be bound
by any such assignment or encumbrance.
42. Consent. Wherever in this Lease Landlord's approval or consent is required,
such approval or consent shall not unreasonably be withheld or delayed.
43. Mortgagee.
The effectiveness of this Lease is subject to the written approval of the
current mortgagee of the Property (the "Mortgagee") within fifteen (15) days
from the date hereof. Said approval shall be diligently and promptly applied for
and processed by Landlord. Tenant shall make no contact with Mortgagee for any
reason whatsoever without Landlord's prior written consent or as may be
otherwise specifically provided to the contrary herein. If Landlord notifies
Tenant in writing within twenty (20) days after the date hereof that said
approval has been withheld, then this Lease shall terminate and be of no further
force and effect. Landlord shall have no liability or responsibility to Tenant
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whatsoever if this Lease is not approved by Mortgagee, other than to promptly
return all pre-paid Rent and the Security Deposit.
Tenant agrees to deliver by registered mail to Mortgagee or any future
mortgagees and/or trust deed holders, a copy of any notice of default served
upon the Landlord, provided that prior to such notice Tenant has been notified
in writing of Mortgagee's address and the addresses of such future mortgagees
and/or trust deed holders. Tenant further agrees that if Landlord shall have
failed to cure such default within the time provided for in this Lease, then
Mortgagee or such future mortgagees and/or trust deed holders shall have an
additional sixty (60) days within which to cure such default or, if such
default cannot be cured within that time, then such additional time as may be
necessary to cure such default shall be granted if within such sixty (60) days
Mortgagee or such future mortgagee and/or trust deed holder has commenced and is
diligently pursuing the remedies necessary to cure such default (including,
without limitation, commencement of foreclosure proceedings if necessary to
effect such cure) in which event this Lease shall not be terminated while such
remedies are being so diligently pursued. Notice of the termination of this
Lease pursuant to the terms of this Section 43 by Tenant shall not be effective
unless and until said notice is duly delivered and any such interested party
shall fail to cure the default upon which such termination notice is based.
Tenant hereby agrees not to look to any successor in title to the Property (or
mortgagee in possession) for accountability for the Security Deposit, unless the
same has actually been received by such successor in title or mortgagee in
possession.
In the event that Mortgagee or any future mortgagee shall foreclose its
mortgage, or exercise any of the other remedies provided for by law or contained
in such mortgage resulting in the transfer of fee title to the Property (or any
part thereof containing the Demised Premises) then Tenant will, upon request by
any person or entity succeeding to the interest of Mortgagor as a result of such
enforcement, automatically become the tenant of such successor in interest,
without any change in the terms, covenants and conditions of this Lease,
provided, however, that such successor in interest shall not be bound by (i) any
payment of Rent (Fixed or Additional) for more than one (1) month in advance,
other than the Security Deposit if such successor in title shall obtain the
same, or (ii) any amendment or modification of this Lease made without the
consent of Mortgagee or any such successor in interest. Upon request by any such
successor in interest, Tenant shall execute and deliver an instrument or
instruments confirming such attornment, provided that Tenant's failure to do so
shall not affect the provisions of this Section 43(c) and if Tenant shall fail
to execute any such instrument within ten (10) days of request therefor, Tenant
hereby irrevocably constitutes and appoints Landlord and/or any such successor
in interest as attorney-in-fact, coupled with an interest, to execute and
deliver the same for and on behalf of Tenant.
44. Transfer of Landlord's Interest.
The term "Landlord" as used in this Lease, so far as covenants or agreements on
the part of Landlord are concerned, shall be limited to mean and include only
the owner or owners of Landlord's interest in this Lease. Upon any transfer or
transfers of such interest, Landlord herein named (and in case of any
subsequent transfer the then transferor) shall thereafter be relieved of all
liability for the performance of any covenants or agreements on the part of
Landlord contained in this Lease.
45. Notices. All notices, demands or other communications ("notices") permitted
or required to be given hereunder shall be in writing and, if mailed postage
prepaid by United States certified or registered mail, return receipt requested,
shall be deemed given on the sooner of: (a) three (3) days after the date of
mailing thereof; or (b) the date of actual receipt. All notices not so
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mailed shall be deemed given on the date of actual receipt. Notices shall be
addressed as follows: (a) If to Landlord, to: John DiMenna, Seaboard Property
Management, Inc., Two Stamford Landing, Stamford, CT 06902 and (b) if to
Tenant, to Bob Coletti, Intelligent Information, Inc., One Dock St., Stamford,
CT 06902. Landlord and Tenant may from time to time by notice to the other
designate another place or other places for the receipt of future notices.
46. Shoring
If any excavation or construction is made adjacent to, upon or within the
Building, or any part thereof, Tenant shall afford to any and all persons
causing or authorized to cause such excavation or construction license to enter
upon the Demised Premises for the purpose of doing such work as such persons
shall deem necessary to preserve the Building or any portion thereof from injury
or damage and to support the same by proper foundations, braces and supports,
without any claim for damages or indemnity or abatement of the Rent, or of a
constructive or actual eviction of Tenant.
47. Miscellaneous
In any action or proceeding which Landlord or Tenant may be required to
prosecute to enforce its respective rights hereunder, the unsuccessful party in
such action or proceeding agrees to pay all costs incurred by the prevailing
party therein, including reasonable attorneys' fees. If Landlord commences any
summary proceeding or an action for non-payment of the Rent or any portion
thereof, Tenant shall not interpose any non-mandatory counterclaim of any nature
or description in any such proceedings or action.
This Lease shall be deemed to have been made in and shall be construed in
accordance with the laws of the State of Connecticut.
This Lease sets forth all the covenants, promises, agreements, conditions and
understandings between Landlord and Tenant concerning the Demised Premises, the
Building and the Property, and there are no covenants, promises, agreements,
conditions or understandings, either oral or written, between them other than as
are herein set forth. Except as herein otherwise provided, no subsequent
alteration, amendment, change or addition to this Lease shall be binding upon
Landlord or Tenant unless reduced to writing and signed by them.
At the request of either party, Landlord and Tenant shall execute, acknowledge
and deliver a memorandum with respect to this Lease sufficient for recording. In
no event shall this Lease be recorded and if Tenant records this Lease in
violation of the terms hereof, in addition to any other remedy available to
Landlord upon Tenant's default, Landlord shall have the option to terminate this
Lease by recording a notice to such effect. If a memorandum of this Lease is
recorded, Tenant shall, on the expiration of the Term, execute, acknowledge and
deliver to Landlord an instrument in recordable form releasing and quitclaiming
to Landlord all right, title and interest of Tenant in and to the Demised
Premises by reason of this Lease or otherwise.
Tenant shall have no claim, and hereby waives the right to any claim, against
Landlord for money damages by reason of any refusal, witholding or delaying by
Landlord of any consent, approval or statement of satisfaction, and in the event
of such refusal, withholding or delay. Tenant's only remedies therefor shall be
an action for specific performance, injunction or declaratory judgment to
enforce any such requirement.
If any provision contained in an exhibit or addendum hereto is inconsistent with
any other provision of this Lease, the provision contained in such exhibit or
addendum shall control, unless otherwise provided herein or in such exhibit or
addendum.
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The use of the neuter singular pronoun to refer to either party shall be deemed
a proper reference even though it may be an individual, partnership, corporation
or a group of two or more individuals or corporations. The necessary grammatical
changes required to make the provisions of this Lease apply in the plural number
where there is more than one Landlord or Tenant and to either corporations,
associations, partnerships or individuals, males or females, shall in all
instances be assumed as though in each case fully expressed.
This Lease has been executed in several counterparts, all of which constitute
one and the same instrument.
As used in this Lease, any list of one or more items preceded by the word
"including" shall not be deemed limited to the stated items but shall be deemed
without limitation.
If more than one person or entity executes this Lease as Tenant, each such
person or entity shall be jointly and severally liable for observing and
performing each of the terms, covenants, conditions and provisions hereof to be
observed or performed by Tenant.
Tenant shall assume and pay to Landlord at the time of paying the Rent or any
portion thereof any excise, sales, use, gross receipts or other taxes (other
than a net income or excess profits tax) which may be imposed on or measured by
the Rent or portion thereof or as may be imposed on or on account of the
Landlord and Tenant relationship evidenced and provided for hereby and which
Landlord may be required to pay or collect under any law now in effect or
hereafter enacted.
48. Acceptance. The offer represented in this Lease is not accepted by Landlord
until all counterparts of this Lease have been fully executed and delivered by
both Landlord and Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease the day and year first above written.
Landlord:
SEABOARD PROPERTY MANAGEMENT, INC.
RECEIVER ONE DOCK STREET
By:
-------------------------------
Its
Tenant:
INTELLIGENT INFORMATION INCORPORATED
By:
-------------------------------
Its CEO
25
<PAGE> 29
EXHIBIT 1
[MAP OMITTED]
<PAGE> 30
EXHIBIT 2
WORKLETTER
ONE DOCK STREET
This schedule sets forth the Finish Work to be furnished and installed by
Landlord without cost to Tenant, which Finish Work, unless otherwise specified,
shall be of the material, design, capacity, finish and color of the building
standard adopted by the Landlord for the building.
Tenant Plans & Specifications
All plans shall be prepared at the Landlords sole expense, and shall include
both Building Standard Work and Special Work. The plans shall be consistent with
all applicable building codes, and with the design, structural capacities,
construction, and equipment of the building. All HVAC, electrical, plumbing, and
structural plans and specifications shall be prepared by Landlord's engineers at
Landlord's sole expense.
All Tenant plans and specifications are subject to Landlord's written approval,
which Landlord covenants it will not unreasonably withhold. Tenant plans shall
be filed for approval and issuance of all permits with the appropriate public
authorities at Landlord's expense.
The Landlord will bear the cost of the work to the extent that it constitutes
Building Standard Work, and Tenant will pay to the Landlord, the cost of all
that part, if any, of the work which constitutes special work. No allowance will
be made for the omission of any Building Standard Work except in the case where,
at the request of the Tenant and with approval of the Landlord, part of the
Building Standard Work is omitted and the Special Work of a similar nature and
for a similar use is substituted and incorporated in the work.
"Tenant may substitute like items for Building Standard Items, provided that (a)
such substitute shall be of a like nature and of equal or greater quality for
that of which it was substituted, and (b) Landlord shall install such
substitute."
Before proceeding with any special work (work requested by Tenant over and above
Building Standard Work) Landlord shall submit to Tenant an estimate of the cost
of such work and a statement of terms and conditions in which said Special Work
is to be performed.
The cost of Special Work shall mean the actual cost incurred by the Landlord, in
having such work done by its contractor(s), plus the charges of any engineers
whose services may be required, plus 10% overhead and 10% profit.
1. Partitions
Furnish and install not more than one lineal foot of partition, as described
below, for each 15.0 square feet of area rented. The partition is from floor to
deck (or ceiling), and consists of 2- _._ steel studs, 1/2" sheetrock on each
side, and 4" vinyl base. There will be no jogs, curves or angles on any
partition. Partitions terminating at the Building exterior wall shall meet
either a mullion or pilaster.
2. Doors and Frames
A. Each Tenant shall have one Building Standard Tenant entrance, as described
below. Said entrance shall consist of a red oak framed entrance - 5 x 8,
with a 3 x 8 c 1-3/4 solid core red oak door, sidelight (window), and
oak signage panel.
<PAGE> 31
B. Furnish and install not more than one 2'-8" x 7 x 1-3/4" solid core red
oak veneer door, or equal, per each, 25 lineal feet of Landlord's standard
partitioning as described above.
C. All doors (except Tenant entrance) to be set in hollow metal frame.
3. Hardware
A. Tenant Entrance - furnish and install one lever handled mortise lock,
surface mounted closer, butts, silencers, strike plates, etc.
B. For all doors supplied by landlord, furnish and install latch set, butts,
silencers, strike plate etc.
C. All Hardware to be Schlage or equal.
D. All locksets shall be keyed to the Building master Key system.
4. Ceilings
All wood Ceilings to be sandblasted, and exposed.
5. Electrical
A. Lighting - Furnish and install not more than one 2 x 4 fluorescent
fixture, pendant mounted each having four lamps with standard ballasts for
each 100 square feet rented.
B. Switches - Furnish and install not more than one (1) switch for the above
described light fixtures, per each 350 square feet of area rented.
Switches to be installed in sheetrock partitions.
C. Outlets - Furnish and install not more than one duplex wall convenience
electrical outlet, in sheetrock partition, for each 150 square feet of
area rented.
The Building will contain wires, risers, conduits, feeders and panelboards
necessary to provide an electrical load of five (5) watts per square foot of
rentable floor area.
6. Venetian Blinds
Landlord shall supply and install Leveler or equal venetian blinds at all
exterior windows.
7. Floor Covering
A carpeting allowance of $15.00 per square foot of rentable area will be
allowed to Tenant.
8. Painting
A. Prepare all new surfaces for paint and paint all sheetrock walls two (2)
coats of flat paint, in colors to be selected by Tenant from Building
Standard color chart, not to exceed one (1) color per room, and four (4)
colors per floor. Where colors meet on any partition or other flat
surface, such color breaks shall be at Landlord's expense.
B. All trims shall be finished with two (2) coats of semi-gloss enamel.
Colors to be selected by Tenant from Building Standard color chart.
C. All interior wood doors shall receive stain, clear finish, or paint, as
desired by Tenant. All Tenant entrance doors shall receive Building
Standard finish.
<PAGE> 32
D. "All exposed piping, ductwork and steel reinforcing plates, shall be
painted, in a color selected by Tenant, from Building Standard color
chart, not to exceed four (4) colors per floor and one (1) color per
room."
Painting of any piping, ductwork, etc. installed as a result of work not
covered by the Building Standard Work (ie - Special Work) shall be at
Landlord's expense.
9. HVAC
A. The Building HVAC system shall consist of a combination of central core
and perimeter heat pump unit to heat and cool at every other window of the
exterior wall of the demised premises. The system is designed to maintain
the following temperatures and relative humidities in the demised
premises:
I. Cooling Cycle -
Interior - 75 F - Dry Bulb
50% - Relative Humidity
Exterior - 95 F - Dry Bulb
75 F - Wet Bulb
II. Heating Cycle -
70 F interior at 0 F exterior
B. The Landlord shall furnish and install the following for interior space:
1. One (1) 9" x 9" - 4 way diffuser per 150 square feet of rented
area.
2. One (1) 12" x 12" - 4 way diffuser per 300 square feet of rented
area.
"The sizes are approximate. The actual sizes will be in accordance with
the engineer's recommendations, based on the actual design of the demised
premises."
C. Design standards, and maintenance of these conditions is based on an
occupancy of not more than one person per 100 square feet of rentable
floor area, and a total connected load of not more than four (4) watts per
square foot of rentable floor area, for lighting and standard electrical
office power.
10. Life Safety Systems
A. Any relocation of Building sprinkler heads shall be at the Landlord's
expense.
B. Landlord will furnish and install building standard exit signs as required
by applicable local codes.
<PAGE> 33
RIDER TO EXHIBIT 2
Exhibit 2 is included herein only to set forth the design standards for the
Building and a minimum acceptable quality of materials and finishes and is not
meant to represent work within the Demised Premises to be performed by Landlord.
1. Landlord will provide the labor, materials and equipment to complete the work
as per the attached drawing by CPG Architects dated April 26, 1995.
2. Landlord will install and provide a telephone system integrated into a common
building system operated by an independent contractor. All inbound and outbound
telephone calls may, at Tenant's option be routed through the common switch
using major carriers. Access charges, local and long distance rates will be
competitive with the lowest rates in the Stamford area for a business of
comparable size and calling pattern. The Demised Premises will be wired using
Category 3 and/or 5 cabling as necessary, and shall include 18 handsets, which
will include substantially all the features (other than voice mail) listed in
the brochure attached hereto and made a part hereof.
Additional handsets and cabling, and maintenance after the expiration of a one
year warranty period, will be at the Tenant's expense. Tenant can obtain central
equipment to provide a self contained system for an additional $5000 [or $7500
if more than 20 phones] adjusted for inflation from the Landlord's contractor
during the original term of the Lease.
3. Tenant may install at its sole expense, 5 satellite dish(es) on the roof.
Location and installation to be agreed upon by Landlord and Tenant.
Additional satellite dishes may be installed with reasonable approval of
Landlord subject to space available on the roof.
<PAGE> 34
[GRAPHIC OMITTED]
<PAGE> 35
ONYX
Digital Communication
Systems
[GRAPHIC OMITTED]
HIGH TECHNOLOGY
WITH A HUMAN TOUCH
<PAGE> 36
No two ONYX Digital Communication Systems are exactly alike.
The Power To Be Human.
There's an ONYX system for virtually every business environment. And built
into each system is a level of flexibility unmatched in the industry, allowing
businesses to create a truly customized telecommunications system. Businesses of
all types and sizes have discovered that ONYX gives their telecommunications a
human quality--adaptability.
Every telephone in an ONYX system; ONYX II, ONYX III and ONYX IV, can be
programmed to react to changing business conditions as they occur. With the
tremendous range and variety of useful features, each ONYX system is a powerful
smart new tool for communicating, from desk to desk, headquarters to field, you
to your customers.
The moment you pick up the solidly built, ergonomically sculptured ONYX
handset, something tells you you're dealing with a very special telephone. The
large, soft-touch dial pad and clear display reflect the human engineering
behind the scenes. ONYX is engineered for people, people working in all types of
businesses, each with a very unique set of communication requirements. The best
in digital communication is now easily within reach with ONYX. It's high
technology with a human touch.
More Than A Telephone Today.
Sophisticated voice and text processing features, all with ONYX
adaptability, make your telephone system a customized multi-functional office
tool.
With Text Messaging you get up to 64 preprogrammed messages such as "In a
meeting," and "On Vacation". When you receive an internal call, you can have
your message appear automatically on the caller's display phone. Some messages
can be customized. Choose a message such as "Back at ____" and fill in the
appropriate time using the dial pad.
You can also use your ONYX display telephone as a phone book, scroll
through a list of names and press the dial key when you see the name of the
person you want to call. On internal calls, you'll see the name of the person
calling you appear on the LCD of your display phone. And Text Prompts help
smooth feature operation.
The addition of a digital voices processor card gives you a useful array
of specialized voice processing features. You can hear feature prompts such as
"for auto call-back, press the callback key," and hear the status of an
extension; "do not disturb." And with Personal Greeting just speak into your
phone to record a brief message. This card also gives you Park and Page. Leave a
message to yourself such as "Bill, you have a call," and have that message
automatically sent throughout the system (or through an external paging system)
when your extension rings. Another power voice processing feature, Automated
Attendant, brings people together. It gives your company flexibility in the way
incoming calls are handled, electronically greeting callers and directing them
to proper extensions, all within a framework of greetings, message handling and
call routing procedures you customize.
[GRAPHIC OMITTED]
<PAGE> 37
Add an ONYX Voice Mail unit to the Automated Attendant and you get the
maximum in voice processing. When leaving the office simply forward your calls
to your ONYX mailbox. Reply to a colleague's message automatically; you don't
even have to know their extension number. While callers often forget to leave
the time of their message, ONYX won't. It can tell you the time and date of each
message. ONYX will also contact you at your home, cellular phone or pager,
anywhere you designate. Moreover, ONYX Voice Mail is fully integrated, meaning
you get quick and easy access to all the features. To call your mailbox, for
example, all you have to do is press the phone's message key.
ONYX Will Be Even More Tomorrow.
ONYX gives you maximum flexibility today and room for growth tomorrow.
Each telephone can adapt to individual and departmental needs as they change.
And every system in the ONYX series uses the same telephone instruments so that
your telecommunication system can grow with your business, all the way to a
72-line, 180-station system.
Data features make ONYX perfect for the coming age of the paperless
office, while helping with some very practical data transmission jobs today.
Costly dedicated data lines and dedicated modems can be eliminated and employees
can use ONYX for peripheral sharing, accessing mainframes, file service and for
broadcasting to multiple terminals.
Designed To Lower Communication Costs.
With its state-of-the-art call management features, you might want to
refigure overhead costs after installing an ONYX system.
Toll Restriction helps you control expensive long-distance calls by
allowing you to decide what can be dialed from each phone, while Automatic Route
Selection saves you money automatically choosing the least expensive
long-distance carrier.
Simplify billing with an Account Code procedure which documents time for
clients and assures the call is billed to the appropriate customer. Track the
calls made from each extension with Station Message Detail Recording and
optimize line usage with built-in Call Management Reports.
With Remote Diagnostics you'll save on service calls. ONYX monitors its
own health and automatically reports faults to the attendant. Remote Access
reduces costly co-site service time and eliminated unnecessary site visits.
With Features To Boost Office Productivity.
A comprehensive selection of Automatic Call Distribution (ACD) features
allows automatic distribution of calls equally among agents, provides management
with full reports, and supervisors with monitoring and override capabilities.
Enhanced ACD features in ONYX IV support up to sixteen groups and sixteen
supervisors and provides an impressive list of system management features. It
alerts the supervisor when a call threshold is reached so overflow calls can be
picked up or redirected to another ACD group or messaging option. With the
addition of a digital voice processing card, the ACD supervisor can easily
program and store a system-wide announcement right from the telephone.
Delayed Ringing and Call Coverage mean you won't miss important messages
or discourage callers. After a selected number of rings, your call.
[GRAPHIC OMITTED]
Standard Telephone
[GRAPHIC OMITTED]
Display Telephone
<PAGE> 38
[GRAPHIC OMITTED]
5400 5401 5402 5403 5404
5405 5406 5407 5408 5409
PAT BILL JOE MIKE PAUL
VERA BONNIE AL JANE CAROL
[GRAPHIC OMITTED]
PAGE PARK C.FWD C.BACK MSG
HOLD INTERCOM CONF DHO [ILLEGIBLE]
[ILLEGIBLE]
<PAGE> 39
ONYX, II, III, IV Features
[ILLEGIBLE]
[GRAPHIC OMITTED]
Attendant Display Console
DEDICATED TO YOUR SUCCESS
NITSUKO AMERICA
TELECOM DIVISION
4 FOREST PARKWAY
SHELTON, CT 08484
TEL: 208 828-5400
FAX: 203-828-5458
<PAGE> 40
EXHIBIT 3
CLEANING SPECIFICATIONS
GENERAL CLEANING NIGHT SERVICES
NIGHTLY
Dust sweep flooring with specially treated cloths to ensure dust-free
floors.
Wash granite flooring in Building entrance foyers.
Carpet sweep carpeted areas and rugs four nights each week and vacuum once
each week, moving light furniture other than desks, file cabinets, etc.
Clean and vacuum elevator cabs nightly.
Sweep private stairways; wash as necessary and/or vacuum private
stairways.
Empty and clean wastepaper baskets, ash trays, receptacles, etc., damp
dust as necessary.
Clean cigarette urns and replace sand or water as necessary.
Remove wastepaper and waste materials to a designated area in the
premises, using special janitor carriages.
Dust and wipe clean furniture, fixtures, desk equipment, telephones and
window sills with specially treated cloths.
Dust baseboards, chair rails, trim, louvers, pictures, charts, doors, etc.
within reach
Wash drinking fountains and coolers; polish as necessary.
OFFICE AREAS -- PERIODIC CLEANING
Remove fingermarks from metal partitions and other similar surfaces, as
necessary.
OFFICE AREAS -- HIGH DUSTING
Do high dusting every three months which includes the following:
-- Dust pictures, frames, charts, graphs and similar wall hangings not
reached in nightly cleaning.
-- Dust exterior of lighting fixtures
-- Dust overhead pipes, sprinklers, etc.
-- Dust venetian blinds.
-- Dust window frames.
Dust vertical surfaces such as partitions, ventilating louvers, etc.
not reached in nightly cleaning.
LAVATORIES -- NIGHTLY
Sweep and wash flooring with approved germicidal detergent solution, using
spray-tank method.
Wash and polish mirrors, powder shelves, bright work, etc., including
flushometers, piping and toilet seat hinges.
<PAGE> 41
Wash both sides of toilet seats, wash basins, bowls and urinals with
approved germicidal detergent solution.
Dust partitions, tile walls, dispensers, doors and receptacles.
Remove wastepaper and refuse to a designated area in the premises, using
special janitor carriages.
Fill toilet tissue, soap and towel dispensers with supplies.
WINDOWS
Interior and exterior windows to be washed annually.
Tenants requiring services in excess of those described above shall request the
same through Landlord, at such tenant's expense.
<PAGE> 42
EXHIBIT 4
RULES AND REGULATIONS
1. The right of all tenants with respect to use of entrances, corridors and
elevators of the Building are limited to ingress to and egress from each
tenant's premises for tenants and their respective employees, licensees
and invitees and for no other purpose. No tenant shall invite to such
tenant's premises or permit the visit of persons in such numbers or under
such conditions as to interfere with the use and enjoyment of any of the
plazas, entrances, corridors, escalators, elevators and other facilities
of the Building by other tenants. Fire exits and stairways are for
emergency use only and they shall not be used for any other purposes by
any tenant, the employees, licensees or invitees. No tenant shall encumber
or obstruct or permit the encumbrance or obstruction of any of the
sidewalks, plazas, entrances, corridors, elevators, fire exits or
stairways of the Building. Landlord reserves the right to control and
operate the public portions of the Building and the public facilities, as
well as facilities furnished for the common use of all tenants, in such
manner as Landlord deems best for the benefit of tenants generally.
2. The cost of repairing any damage to the public portions of the Building or
the public facilities or to any facilities used in common with other
tenants, caused by a tenant or the employees, licensees or invitees of
such tenant, shall be paid by such tenant.
3. Landlord may refuse admission to the Building, outside of ordinary
business hours to any person not known to the watchman in charge or not
having a pass securing access code issued by Landlord or not properly
identified and may require all persons admitted to or leaving the Building
outside of ordinary business hours to register. All employees, agents and
visitors of each tenant shall be permitted to enter and leave the Building
whenever appropriate arrangements have been previously made between
Landlord and such tenant with respect thereto. Each tenant shall be
responsible for all persons for whom he requests such persons. Any person
whose presence in the Building at any time shall, in the judgment of
Landlord, be prejudicial to the safety, character, reputation and interest
of the Building or its tenants may be denied access to the Building or may
be ejected therefrom. In case of invasion riot, public excitement or other
commotion, Landlord may prevent all access to the Building during the
continuance of the same by closing the doors or otherwise, for the safety
of the tenants and protection of property in the Building. Landlord may
require any person leaving the building with any Package or other object
to exhibit a pass from the tenant occupying the premises from which the or
object is being removed but the establishment and enforcement of such
requirement shall not impose any responsibility on Landlord for the
protection of any tenant against the removal of property from the premises
of such tenant. Landlord shall, in no way, be liable to any tenant for
damages or loss arising from the admission, exclusion or ejection of any
person to or from such tenant's premises or the Building under the
provisions of this rule.
4. No tenant shall obtain or accept for use in its premises floor polishing,
lighting maintenance, cleaning or other similar services from any persons
not authorized by Landlord, which authorization will not be unreasonably
withheld. Such services shall be furnished only at such hours, in such
places within such tenant's premises and under such regulations as may be
fixed by Landlord.
<PAGE> 43
5. No awnings or other projections over or around the windows shall be
installed by any tenant and only such window blinds as are supplied or
permitted by Landlord shall be used in any tenant's premises.
6. All entrance doors in each tenant's premises shall be left locked when the
tenant's premises are not in use. Entrance doors shall not be left open at
any time. All windows in each tenant's premises shall be kept closed at
all times.
7. No noise, including the playing of any musical instruments, radio or
television which, in the judgment of Landlord, might disturb other tenants
in the Building shall be made or permitted by any tenant except as
expressly approved by Landlord. Nothing shall be done or permitted in any
Tenant's premises and nothing shall be brought into or kept in any
tenant's premises, which would impair or interfere with any of the
Building services or the proper and economic heating, cleaning or other
servicing of the Building or any premises therein, or the use or enjoyment
by any other tenant of any other premises, nor shall there be installed by
any tenant any ventilating, air conditioning, electrical or other
equipment of any kind, which in the sole judgment of Landlord might cause
any such impairment or interference. No dangerous, inflammable,
combustible or explosive object or material shall be brought into the
Building by any tenant or with the permission of any tenant.
8. No acids, vapors or other materials shall be discharged or permitted to be
discharged into the waste lines, vents or flues of the Building which may
damage them. The water and wash closets and other plumbing fixtures in or
serving any tenant's premises shall not be used for any purpose other than
the purpose for which they were designed or constructed and no sweeping,
rubbish, rags, acids or other foreign substances shall be deposited
therein. All damage resulting from any misuse of the fixtures shall be
borne by the tenant who, or whose servants, employees, agents, visitors or
licensees, shall have caused the same.
9. No signs, advertisements, notices or other lettering shall be exhibited,
inscribed, painted or affixed by any tenant on any part of the outside of
the Building or the premises occupied by such tenant, without the prior
consent of the Landlord. In the event of violation of the foregoing by any
tenant, the Landlord may remove the same without any liability and may
charge the expense incurred by such removal to the tenant or tenants
violating this rule. Interior signs and lettering on doors and elevators
shall be inscribed, painted or affixed for each tenant by Landlord at the
expense of such tenant and shall be of a size, color and style acceptable
to Landlord. Landlord shall have the right to prohibit any advertising by
any tenant which impairs the reputation of the Building or its
desirability as a building for offices and upon written notice from the
Landlord, the tenant in question shall refrain from or discontinue such
advertising.
10. No additional locks or bolts of any kind shall be placed upon any of the
entrance doors or windows in any tenant's premises and no lock on any
entrance door therein shall be changed or altered in any respect. The
foregoing provision shall not apply to locks or bolts on doors to closets,
storage space or cabinets contained in the premises. Duplicate keys for a
tenant's premises and toilet rooms shall be procured only from a tenant's
Landlord, which nay make a reasonable charge therefor. Upon the
termination of a tenant's lease, all keys to such tenant's premises and
toilet rooms shall be delivered to the Landlord.
11. No tenant shall mark, paint, drill into or in any deface any part of the
Building or the premises leased to such tenant. No boring, cutting or
stringing of wires shall be permitted,
<PAGE> 44
except with prior written consent of Landlord, and as Landlord may direct.
No tenant shall install any resilient tile or similar floor covering in
the premises leased to such tenant except in a manner approved by
Landlord.
12. No tenant shall use or occupy or permit any portion of the premises leased
to such tenant to be used or occupied as an office for a public
stenographer or typist or as a barber or manicure shop or as an employment
bureau. No tenant or occupant shall engage or pay any employees in the
Building, except those actually working for such tenant or occupant in the
Building.
13. No premises shall be used or permitted to be used at any time, as a store
for the sale of goods, wares or merchandise of any kind or as a
restaurant, shop, booth, bootblack or other stand, or for the conduct of
any business or occupation which predominantly involves direct patronage
of the general public in the premises leased to such tenant or for
manufacturing or for other similar purpose.
14. The requirements of tenants will be attended to only upon application at
the office of the Building. No employee of Landlord shall perform any work
or do anything outside of the regular duties of such employee, unless
under special instructions from the office of Landlord
15. No employees of any tenant shall loiter around the hallways, stairways,
elevators, front, roof or any other part of the Building used in common by
the occupants thereof.
16. If the premises leased to any tenant shall become infested with vermin
because of tenant's use thereof, such tenant, at its expense, shall
promptly cause its premises to be exterminated, to the satisfaction of
Landlord and shall employ such exterminators therefor as shall be approved
by Landlord.
17. Canvassing, soliciting and pedaling are prohibited and no tenant shall
suffer or permit the same on or about any portion of the Building.
<PAGE> 45
EXHIBIT 5
OPERATING EXPENSE AND IMPOSITINS
INCLUDING IN ANNUAL FIXED RENT RATE
ESTIMATED 1995 EXPENSES
ONE DOCK STREET
OPERATING EXPENSES AMOUNT
- ------------------ ------
Insurance $ 20,000
Cleaning $ 70,000
Repairs & Maintenance $ 90,000
On Site Superintendent $ 31,300
Security $ 61,300
Management Fees $ 45,000
Water & Sewer $ 4,300
Miscellaneous $ 8.500
--------
TOTAL OPERATING EXPENSES $330,400
REAL ESTATE TAXES $ 92,000
<PAGE> 46
EXHIBIT 6
ADDITIONAL PROVISIONS
INTELLIGENT INFORMATION INCORPORATED
1. Extension Option
Provided the Tenant is not in default under the Lease, the Tenant shall
have the option, exercisable by written notice from Tenant to Landlord given not
less than four (4) months prior to the end of the initial Term, to extend the
term of this Lease for an additional five years on all of the terms and
conditions of this Lease, except that this extension option shall not apply
during the extension period.
The Annual Fixed Minimum Rent for the extension period shall be increased
but not decreased by an amount equal to 90% of the Fair Market Rent Value to be
agreed upon by Landlord and Tenant.
2. Expansion Option
Provided Tenant is not in default of any of its obligations under this
Lease, Landlord agrees to provide Tenant the first right of offer for contiguous
space on the fifth floor. Landlord shall give Tenant thirty (30) days written
notice of contiguous space available. If Landlord does not receive an acceptable
written offer from Tenant within thirty (30) days from receipt of Landlord's
Notice, then this option shall expire and become null and void. The Tenant
installation for the expansion space will be provided by Landlord as per the
attached work letter in Exhibit 2.
3. Option to Terminate
Notwithstanding anything to the contrary set forth in this Lease, provided
Tenant is not in default of any of its obligations under this Lease, Tenant
shall have the option to terminate this Lease by tendering to the Landlord a
Notice of Tenant's intention to terminate this Lease, in the event that Landlord
cannot provide adequate Expansion Space within the Building. The aforesaid
Option to Terminate can only be for the period commencing on the first day of
the twenty fourth month following the Lease Commencement Date. In the event the
Option to Terminate is exercised, Tenant shall pay to Landlord as Additional
Rent all unamortized actual costs of tenant installation, brokerage commissions
and telephone installations or continue to pay rent for the balance of the Term
until the space is relet.
In addition, Tenant may terminate this Lease in the event of a
non-correctable permanent or intermittent loss or corruption of the data flow of
the satellite transmission reception to the satellite dishes.
<PAGE> 47
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this
"Agreement") is made the 15th day of May, 1995, and is made between Seaboard
Equities, LLC, a Limited Liability Company, organized and existing under the
laws of the State of Connecticut with a principal place of business at Two
Stamford Landing, Stamford, CT, 06902 (the "Mortgagee") and Intelligent
Information Incorporated, a corporation, organized and existing under the laws
of the State of Delaware with a principal place of business at 6 Suburban
Avenue, Stamford, CT ("Tenant").
BACKGROUND
Seaboard Property Management, Inc. (the "Receiver") is the Receiver of the
fee simple interest in the premises described in Schedule A attached hereto and
made a part hereof (the "Premises"). By a lease dated May 1, 1995 (the "Lease")
made by and between Receiver and Tenant, the Premises therein described (the
"Leased Premises") being a portion of the Premises were demised to Tenant upon
the terms and conditions therein contained. Mortgagee is the owner and holder of
a certain mortgage loan in the amount of $10,000,000 (the "Mortgage") which
Mortgage covers the Premises. Mortgagee wishes to enter into this Agreement
confirming that the Lease is and shall at all times remain subject and
subordinate to the lien of the Mortgage and Tenant has agreed to the same upon
the terms and conditions hereinafter set out.
NOW, THEREFORE, in consideration of One ($1.00) Dollar each to the other
in hand paid, receipt whereof is hereby acknowledged, and in consideration of
the mutual covenants and conditions herein contained, Mortgagee and Tenant agree
as follows:
1. Tenant agrees that the Lease is and shall continue to be subject and
subordinate in all respects to the Mortgage in the above principal amount,
together with interest, and to any renewal, substitution, extension or
replacement thereof not exceeding said amount, as if any such renewal,
substitution, extension or replacement was executed and recorded prior to
the execution of the Lease.
2. Tenant agrees that Tenant shall not alter, modify, amend, change,
surrender or cancel the Lease, or prepay any rent by more than thirty (30)
days, without the prior written consent of Mortgagee, and Tenant shall not
seek to be made an adverse or defendant party in any action or proceeding
brought to enforce or foreclose the Mortgage.
3. Notwithstanding any contrary provision contained in the Lease, Tenant will
not exercise any rights which Tenant may have to cancel or terminate the
Lease (whether by reason of Receiver's default thereunder or otherwise)
without mailing to Mortgagee prior notice of such intention and affording
Mortgagee an opportunity to cure any default or correct any other
<PAGE> 48
circumstance or condition giving rise to such termination or cancellation.
Tenant shall mail to Mortgagee at Mortgagee's principal place of business
(as hereinabove set out) or at such other place as may be hereafter from
time to time designated in writing, a copy of all material notices which
Tenant may from time to time serve upon Receiver pursuant to the terms
and conditions of the Lease. No such notices to Receiver shall be
effective against Mortgagee for any purpose and no such notice shall be
deemed to terminate or cancel the Lease unless a copy of the same is
served upon Mortgagee at the same upon as it is served upon Receiver. At
any time before the rights of Owner shall have been forfeited or adversely
affected because of any default on Receiver's part, and in any event,
within the time permitted Receiver for curing any default under the Lease,
Mortgagee may (without obligation) cure such default, and such cure
performed by Mortgagee shall be as effective to prevent the rights of
Receiver from being forfeited or adversely affected as the same would have
been if done and performed by Receiver.
4. So long as no default exists under the Lease, the Lease shall not be
terminated, nor shall Lessee's use, possession or enjoyment of the Leased
Premises be interfered with or disturbed by any action or proceeding
instituted under or in connection with the Mortgage. Mortgagee shall not
join Tenant as a party-defendant or otherwise in any suit or action to
foreclose the Mortgage and Tenant's use and enjoyment of the Leased
Premises shall not be disturbed if Mortgagee shall take possession of the
Premises (or any part thereof containing the Leased Premises) pursuant to
any such right contained in the Mortgage. However, Mortgagee or any
purchaser of the Premises in foreclosure or any grantee under a conveyance
in lieu of or subsequent to foreclosure (the "New Owner") shall not be:
(a) Liable for any act or omission of Receiver;
(b) Subject to any off-sets or defenses which Tenant may have against
Receiver;
(c) Bound by any rent or additional rent which Tenant may have paid for
more than the then current month to Receiver, except to the extent
received by New Owner; or
(d) Bound by any amendment or modification of the Lease made without
Mortgagee's prior written consent; and
Tenant agrees that Tenant will attorn to New Owner as Tenant's landlord
for the unexpired balance (and any extensions, if exercised) of the term
of the Lease, upon the same terms and conditions as are set forth in the
Lease.
2
<PAGE> 49
5. This Agreement shall bind and inure to the benefit of Mortgagee and Tenant
and their respective successors and assigns.
6. This Agreement is made under and shall be construed in accordance with the
laws of the State of Connecticut.
IN WITNESS WHEREOF, Mortgagee and Tenant have executed and delivered this
Agreement as of the day and year first above written.
MORTGAGEE
SEABOARD EQUITIES, LLC
By: Seaboard Properties, Incorporated
Its: Managing Member
By:
--------------------------------------
Its: President
TENANT
INTELLIGENT INFORMATION
INCORPORATED
By:
--------------------------------------
Its: CEO
3
<PAGE> 1
EXHIBIT 10.4a
LEASE MODIFICATION AGREEMENT
This Lease Modification Agreement made and entered into as of this
day of February, 1997, by and between SEABOARD PROPERTY MANAGEMENT, INC,
RECEIVER ONE DOCK STREET a Delaware corporation, having its principal office at
Two Stamford Landing, Stamford, CT 06902, (herein referred to as "Landlord"),
and INTELLIGENT INFORMATION INCORPORATED, a Delaware corporation, having an
office at One Dock Street, Stamford, Connecticut 06901 (herein referred to as
"Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into a Lease Agreement dated April
27, 1995, (herein referred to as the "Lease") wherein and whereby the Landlord
leased to Tenant and the Tenant hired from the Landlord approximately 3,217
square feet in the building known as One Dock Street, Stamford, Connecticut and;
WHEREAS, Tenant desires to expand and lease an additional 1,830 square
feet on the fifth floor and to modify the Lease accordingly.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, each to the other in hand paid, IT IS
AGREED as follows:
1. All terms contained herein with initial capitalization shall have
the same meanings as set forth in the Lease, except as modified
hereby.
2. Tenant will expand to include an additional suite on the fifth floor
as per the attached Exhibit 1, comprising 1,830 square feet. The new
total rentable area will comprise 5,047 square feet.
3. The Lease Commencement for the additional space will be April 15,
1997.
4. The Lease term for the original space and the additional space will
expire on March 31, 2002.
5. Article 2 of the Lease entitled "Demised Premises, Rent and Term" is
hereby modified to be consistent with the following:
Year 1 $68,134.50 annually.
Year 2 $70,658.00 annually.
Year 3 $73,181.50 annually.
Year 4 $78,228.50 annually.
Year 5 $83,275.50 annually.
6. Article 1. of the Lease is hereby modified to be consistent with the
following:
Tenants share of the Electric Expense shall be: 6.01%
Tenants share of the Operating Expense Increases shall be:
6.01%
Tenants share of the Real Estate Taxes Increases shall be:
6.01%
7. Landlord will, at its sole cost and expense complete all of the work
required to complete the work described in the attached drawings by
CPG Architects.
8. The number of parking spaces granted to Tenant hereunder for the
additional space shall equal fifteen (15).
9. The amount of the Security Deposit is increased to $11,355.75.
Landlord hereby acknowledges that it is currently holding a security
deposit in the amount of $5,625.00 which will be credited toward the
above described amount.
<PAGE> 2
10. Exhibit 6 will be modified as follows:
Tenant will have the option to extend the term for a period of five
(5) years. The fixed minimum rent shall be modified to an amount
equal to 90% of the Fair Market Rent, as per the same formula as in
the original Lease Agreement.
Tenant may install up to an additional four (4) satellite dishes on
the roof. The location of these and the installation procedure shall
be subject to Landlord's approval.
11. Provided Tenant is not in default under any of the terms of the
Lease Agreement, Tenant will have the option to terminate the lease
at the end of the third year of the Lease Modification Agreement
subject to (120) days written notice and a payment to Landlord equal
to the cost of the unamortized expenses incurred by Landlord in
connection with this Lease Modification Agreement. In addition,
Tenant may terminate this Lease in the event of a non-correctable
permanent or intermittent loss or corruption of the data flow of the
satellite transmission reception to the satellite dishes.
12. The Tenant represents that it has dealt with no broker in connection
with this Modification.
13. All of the defined terms contained in Article 1 of the Lease are
hereby amended to comport with the modifications contained herein.
14. All other terms and conditions of the Lease are otherwise deemed
ratified, continued and unaffected by the changes herein.
15. It is understood and agreed that this Modification is submitted to
the Tenant for signature with the understanding that it shall not
bind the Landlord unless and until it has been executed by the
Landlord and delivered to the Tenant or Tenant's attorney.
16. The Lease, as hereby modified, shall be binding upon the parties
hereto, their successors and assigns.
IN WITNESS WHEREOF, the parties hereto have each respectively caused this
Second amendment of Lease to be executed, authorized and delivered as of the day
and year first above written.
INTELLIGENT INFORMATION INCORPORATED.
By:
----------------------------------
Its: Controller/Asst Treasurer
SEABOARD PROPERTY MANAGEMENT, INC
RECEIVER ONE DOCK STREET
By:
----------------------------------
Its: President
<PAGE> 1
EXHIBIT 10.5
RIDGEWOOD SQUARE OFFICE PARK COMMERCIAL LEASE
This COMMERCIAL LEASE is made between RIDGEWOOD SQUARE, LTD., a Texas Limited
Partnership, by and through its duly authorized agent, Kensington Asset
Advisors, Inc., herein called Landlord, and INTELLIGENT INFORMATION
INCORPORATED, herein called Tenant.
Tenant thereby offers to lease from Landlord the premises situated in the
Ridgewood Square Office Park ("Office Park"), Hurst, Tarrant County, Texas,
described as 1237 Southridge Court, Suite 100 (the "Demised Premises"), upon the
TERMS AND CONDITIONS as follows:
1. Term and Rent Landlord demises the above Demised Premises for a term of FIVE
(5) year(s), commencing March 1, 1997, and terminating on February 28, 2001, or
sooner as provided herein. Tenant shall pay Landlord rent for the Demised
Premises in the total amount of $123,600.00 payable as follows:
First Month Free (March 1997)
Year 1 $1,984.90/mo. $23,818.75/yr.
Year 2 $1,984.90/mo. $23,818.75/yr.
Year 3 $2,092.19/mo. $25,106.25/yr.
Year 4 $2,092.19/mo. $25,106.25/yr.
Year 5 $2,145.83/mo $27,750.00/yr.
The first monthly installment is due upon execution of this Lease, and the
following monthly installments shall be due and payable, without demand, on or
before the first day of each calendar month during the term hereof. All rental
payments shall be made to Landlord at: Ridgewood Square, Ltd., c/o Kensington
Advisors & Associates, Inc., 1412 Main Street, Suite 900, Dallas, Texas 75202.
In the event Tenant holds over after the termination of this Lease for any
reason, Tenant shall be deemed a month to month tenant at 150% of the last
month's rental rate provided for hereunder, and otherwise subject to all of the
terms and conditions of this Lease insofar as the same are applicable to a
month-to-month tenancy.
2. Use. Tenant shall use and occupy the Demised Premises for computer software
development/general office. The Demised Premises shall be used for no other use
or purpose.
3. Care and Maintenance of Demised Premises. Tenant acknowledges that the
Demised Premises is in good order and repair, and accepts same "AS IS" and "WITH
ALL FAULTS." Tenant shall, at its own expense and at all times, maintain the
Demised Premises in good and safe condition, including glass, electrical wiring,
plumbing and any other system or equipment upon the Demised Premises and shall
surrender the same, at termination hereof, in as good condition as received,
normal wear and tear excepted. Tenant shall be responsible for all repairs
required, excepting the roof, exterior walls and structural foundation.
Landlord shall maintain the common areas of the Office Park.
4. Alterations. Tenant shall not, without first obtaining the written consent of
Landlord, make any alterations, additions, changes or improvements in, to or
about the Demised Premises.
5. Ordinances and Statutes. Tenant shall comply with all statutes, ordinances,
laws and requirements of all municipal, state and federal authorities now in
force, or which may hereafter be in force, pertaining to the Demised Premises,
occasioned by or affecting the use thereof by Tenant.
6. Assignment and Subletting. Tenant shall not assign this Lease or sublet any
portion of the Demised Premises without obtaining the prior written consent of
Landlord, in Landlord's sole discretion. Landlord may sell, transfer or assign
its rights and interest hereunder, the Office Park and the Demised Premises, and
from and after the effective date of any such conveyance, Landlord shall have
no further liability under this Lease.
7. Utilities. All applications and connections for necessary utility services on
the Demised Premises shall be made in the name of Tenant only, and Tenant shall
be solely liable for utility charges as they become due, including those for
gas, electricity and telephone services.
8. Entry and Inspection. Tenant shall permit Landlord, Landlord's agents or
potential purchasers, to enter upon the Demised Premises at reasonable times and
upon reasonable notice for the purpose of inspecting same, or curing any default
of Tenant, and will permit Landlord at any time within sixty (60) days prior the
expiration of this Lease, to place upon the Demised Premises any usual "To Let"
or "For Lease" signs or notices, and permit persons desiring to lease the same
to inspect the Demised Premises thereafter.
9. Possession. If Landlord is unable to deliver possession of the Demised
Premises at the commencement hereof, Landlord shall not be liable for any damage
caused thereby, nor shall this Lease be void or voidable, but Tenant shall not
be liable for any rent until possession is delivered and the termination date
hereof shall be extended for the amount of any such delay. Tenant or Landlord
may terminate this Lease if possession is not delivered within thirty (30) days
of the original commencement date of this Lease.
10. Indemnification of Lessor. Landlord shall not be liable for any damage or
injury to Tenant, or any other person, or to any property, occurring on the
Demised Premises or any part thereof, and Tenant agrees to indemnify and hold
Landlord harmless from any claims for damages caused by the acts, conduct,
negligence or misconduct of Tenant, its employees, subtenants, licensees, or
concessionaires, or of any other person entering the Office Park under express
or implied invitation of Tenant.
11. Insurance. Tenant, at its sole expense, shall maintain plate glass, fire,
casualty and general liability insurance upon the Demised Premises, including
bodily injury and property damage, insuring Tenant and Landlord with minimum
coverage of $500,000 for personal injury or death, and $250,000 in respect to
property damage. Tenant shall provide Landlord with a Certificate of Insurance
showing Landlord as additional insured. The Certificate of Insurance will
provide for a ten-day written notice to Landlord in the event of cancellation or
material change of coverage. To the maximum extent permitted by insurance
policies which may be owned by Landlord or Tenant, Tenant and Landlord, to
benefit each other, waive any rights of subrogation which might otherwise exist.
12. Eminent Domain. If time Demised Premises or any part thereof, or any part of
the Office Park materially affecting Tenant's use of the Demised Premises, will
be taken by eminent domain, this Lease may be terminated by either Landlord or
Tenant on the date when title vests pursuant to such taking. Tenant will not be
entitled to any part of the award for such taking of the Demised Premises or any
payment in lieu thereof, but Tenant may file a claim for any taking of fixtures
and improvements owned by Tenant, and for moving expenses, directly from the
taking authority.
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13. Attorney's Fees. In case suit should be brought for recovery of the Demised
Premises, or for any sum due hereunder, or because of any act which may arise
out of the possession of the Demised Premises, by either party, the prevailing
party will be entitled to all costs incurred in connection with such action,
including a reasonable attorney's fees.
14. Waiver. No failure of Landlord to enforce an term hereof will be deemed to
be a waiver.
15. Destruction of Demised Premises. In the event of any partial destruction of
the Demised Premises during the term hereof, from any cause, Landlord shall
forthwith repair the same, provided that such repairs can the made within sixty
(60) days under existing governmental laws and regulations, but such partial
destruction shall not terminate this Lease, except that in the event such
destruction was not caused by Tenant, Tenant shall be entitled to a
proportionate reduction of rent white such repairs are being made, based upon
the extent to which the making of such repairs shall interfere with the business
of Tenant on the Demised Premises. If such repairs cannot be made within said
sixty (60) days, Landlord may make the same within a reasonable time, this Lease
continuing in effect with the rent proportionately abated as aforesaid, and in
the event that Landlord shall not elect to make such repairs, this Lease may be
terminated at the option of either party. In the event that the building in
which the Demised Premises may be situated is destroyed to an extent of not less
than one-third of the replacement costs thereof, Landlord may choose to
terminate this Lease whether the Demised Premises be injured or not. A total
destruction of the building in which the Demised Premises may be situated will
terminate this Lease.
16. Landlord's Remedies on Default. The following event shall be deemed to be
events of default by Tenant under this Lease:
(1) Tenant shall fail to promptly pay any installment of rent when
due.
(2) Tenant shall fail to comply with any term, provision or covenant
of this Lease, other than the payment of rent, and shall not cure such
failure within five (5) days after written notice thereof to Tenant.
(3) Tenant shall desert or vacate any substantial portion of the
Demised Premises.
Upon the occurrence of any of such events of defaults, Landlord shall have the
option to pursue any one or more of the following remedies without any notice or
demand whatsoever.
A. Without terminating this Lease, enter upon and take possession of the Demised
Premises and expel or remove Tenant or any other person who may be occupying
said premises, by force, if necessary, without being liable for prosecution for
damages therefor and, without terminating this Lease, relet the Demised Premises
for the account of Tenant for the remainder of the term or for such term or
terms as Landlord shall see fit, and Tenant shall pay Landlord on demand the
cost of renovating, repairing, reletting and altering the Demised Premises for a
new tenant or tenants; and Tenant agrees to pay Landlord on demand any
deficiency that may arise by reason of such retelling (including real estate
commissions and attorney's fees); or
B. Terminate this Lease and enter upon the Demised Premises by force if
necessary without being liable for prosecution or any claim for damages
therefor, and do whatever Tenant is obligated to do under the terms of this
Lease, and Tenant agrees to reimburse Landlord on demand for any expenses
Landlord may incur in thus effecting compliance with Tenant's obligations under
this Lease, and Tenant further agrees that Landlord shall not be liable for any
damages resulting to the Tenant from such action, whether caused by negligence
of Landlord or otherwise.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any of
the other remedies herein provided, or any other remedies provided by law, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver of
any rent due to Landlord hereunder or of any damages accruing to Landlord by
reason of the violation of any of the terms, provisions and covenants herein
contained. No waiver by Landlord of any violation or breach of any of the terms,
provisions and covenants herein contained shall be deemed or construed to
constitute a waiver of any other violation or breach of any of the terms,
provisions and covenants herein contained. Forbearance by Landlord to enforce
one or more of the remedies herein provided upon an event of default shall not
be deemed or construed to constitute a waiver of such default.
17. Security Deposit. Tenant will deposit with Landlord on the signing of this
Lease the sum of One Thousand Nine Hundred Eighty-Four and 90/100 Dollars
($1,984.90) as security for the performance of Tenant's obligations under this
Lease, including, without limitation, the surrender of possession of the Demised
Premises to Landlord as herein provided. If Landlord applies any part of the
security deposit to cure any default of Tenant, Tenant will, on demand, deposit
with Landlord the amount so applied so that Landlord shall have the full deposit
on hand at all times during the term of this Lease.
18. Additional Rent. Tenant shall pay to Landlord, as additional rental,
Tenant's pro rata share of increases in general real estate taxes, assessments,
and insurance costs to the extent that such expenses increase over those
assessed, imposed or becoming due and payable during the calendar year this
Lease originally commences. Tenant's pro rata share shall be the fraction
determined by which the total square footage of the Demised Premises bears to
the gross leasable area of the Office Park.
19. Notices. Any notice which either party may or is required to give, will be
given by mailing same, postage prepaid, to Tenant at the Demised Premises, with
a copy to: One Dock Street, Suite 500, Stanford, CT 06902; or to Landlord at the
address shown above, or at such other places as may be designated, in writing,
by the parties from time to time.
20. Heirs, Assigns, Successors. This Lease is binding upon and inures to the
benefit of the heirs, assigns and successors in interest to all parties (subject
to the restrictions of Article 6.)
21. Subordination. This Lease is and will be subordinated to all existing and
future liens and encumbrances against the Office Park, and Tenant agrees to
attain to any purchaser of the Office Park.
22. Relocation. Landlord shall be entitled to relocate the Demised Premises to a
comparable location in the Office Park after occupancy by Tenant provided that
Landlord pays the costs and expenses of moving Tenant's furniture and equipment.
23. Right of First Refusal. Tenant shall have the right of first refusal to add
to the Demised Premises during the term of this Lease any space in the Office
Park building located at 1237 Southridge Court, if vacated or surrendered by an
existing tenant or, if now vacant, at such time as Landlord receives an
acceptable offer on such space from a prospective tenant, which space may be
added to the Demised Premises for the remainder of the term of this Lease at the
rental rate, terms and conditions then prevailing for comparable space in the
building, subject to all leases, renewal options and first rights of refusal
which may now be in existence. Notwithstanding any other provision hereof,
Landlord shall have the unrestricted right to re-lease to any existing tenants
in such space upon such terms as Landlord, in its sole discretion, may
determine. Landlord shall offer such space to Tenant by written notice of the
space to be available, the date of availability, and the rental rate thereof.
Within fifteen (15) days of such notice by Landlord that the space is available,
Tenant shall advise Landlord in writing of its intention to either lease the
space offered at the prevailing rental rate stated by Landlord in its notice and
under terms similar to those in the Lease, where applicable, with an expiration
date concurrent with that of this Lease, or to waive its right of first refusal;
provided however, that at the time of this exercise and at the
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date of availability of such space, Tenant is in possession of the Demised
Premises and no event of default by Tenant as defined in this Lease is in
existence, and provided further that Tenant furnishes current financial
statements to Landlord and that no material adverse change in the financial
condition of Tenant has occurred. If Tenant shall fail to give Landlord such
written notice of acceptance within the specified period, or if Tenant waives
its right of first refusal within such fifteen-day period, or if any of the
foregoing conditions to the exercise by Tenant of this right of first refusal
shall not be fully satisfied, Tenant shall be deemed not to have exercised this
right of first refusal and the provisions of this paragraph shall be of no
further force or effect within respect to the space offered to Tenant, and
Landlord may proceed to seek other tenants and enter into leases for such space
without further obligation to Tenant under this right of first refusal. Any
termination of this Lease during the lease term terminates all rights of first
refusal. Any assignment or subletting by Tenant of this Lease terminates all
rights of first refusal.
24. Additional Space. Tenant shall have access to the space required on the roof
of the Building for the installation, at Tenant's sole cost and expense, of five
(5) satellite dishes, specifically Satellite Dish No.____________, Satellite
Dish No. ____________, Satellite Dish No. ____________, Satellite Dish No.
____________, and Satellite Dish No. ____________. Tenant shall be liable for
any damage to the roof, leeks, etc., caused by said dishes, and the dishes will
be installed in such location as reasonably directed by Landlord. After
termination of this Lease, the Tenant, at Tenant's sole cost and expense, shall
remove the five (5) satellite dishes, and repair any damages to the roof, leaks,
etc., as reasonably directed by the Landlord.
25. Improvements. Tenant acknowledges that it has inspected the Demised Premises
and accepts the Demised Premises "AS IS" and "WITH ALL FAULTS," and hereby
expressly accepts same in its present condition, and Landlord makes no warranty
of any kind, express or implied, with respect to the Demised Premises (without
limitation, Landlord makes no warranty as to the suitability or fitness of the
Demised Premises for any purpose).
26. Option to Terminate. Notwithstanding anything to the contrary set forth in
this Lease, provided Tenant is not in default of any of its obligations under
this Lease, in the event of a non-correctable permanent or intermittent loss or
corruption of the data flow of the satellite transmission reception to the
satellite dishes, Tenant shall have the option to terminate this Lease by
tendering to the Landlord a Notice of Tenant's intention to terminate this
lease. Tenant shall give Landlord at least thirty (30) days prior written notice
of its intention to terminate the Lease. In the event this Option to Terminate
is exercised, Tenant shall immediately pay to Landlord as Additional Rent all
unamortized actual costs of Tenant installation and brokerage commissions or
continue to pay rent for the balance of the Term until the space is relet.
Within forty-five (45) days after Tenant takes possession of the Demised
Premises, Landlord shall notify Tenant of the total costs of installation,
brokerage commissions and monthly amortization amount.
27. Entire Agreement. The foregoing constitutes the entire agreement between the
parties and may be modified only by a writing signed by both parties. Tenant
acknowledges that Landlord has made and makes no warranty of any kind, express
or implied, with respect to the Demised Premises (without limitation, Landlord
makes no warranty as to the suitability or fitness of the Demised Premises for
any purpose). The following Exhibits and Special Provisions, if any, have been
made a part of this Lease before the parties' execution hereof: Exhibit "A" -
Legal Description; Exhibit "B" - Site Plan; Exhibit "C" - Rules & Regulations
SIGNED this 7 day of February, 1997
TENANT: LANDLORD:
INTELLIGENT INFORMATION INCORPORATED RIDGEWOOD SQUARE, LTD., by and through
its authorized agent,
Cantex Realties, Inc.
By: /s/ Robert Coletti By: /s/ Timothy O. McNamara
------------------------------ ------------------------------------
Printed Name: Robert Coletti Timothy O. McNamara, Sr., President
--------------------
Its: Controller
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EXHIBIT "A"
LEGAL DESCRIPTION
Being Lots 1, 2, 3, 4, 5, and 6, inclusive, Block 1 of RIDGEWOOD SQUARE, an
Addition to the City of Hurst, Tarrant County, Texas, according to the Revised
Plat thereof recorded in Volume 388-127, Page 6, Map Records, Tarrant County,
Texas.
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EXHIBIT "B"
SITE PLAN
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EXHIBIT "C"
RIDGEWOOD SQUARE BUSINESS PARK
RULES AND REGULATIONS
1. Tenant will refer all contractors, contractor's representatives and
installation technicians, rendering any service to Tenant, to Landlord for
Landlord's supervision, approval, and control before performance of any
contractual service. This provision shall apply to all work performed in the
Business Park including installations of telephones, telegraph equipment,
electrical devices and attachments, and installations of any nature affecting
floors, walls, woodwork, trim, windows, ceilings, equipment or any other
physical portion of Business Park.
2. Movement of furniture or office equipment, in or out of said Business Park,
or dispatch or receipt by Tenant of any merchandise or materials which requires
use of elevators or stairways, or movement through buildings or entrances shall
be restricted to hours designated by Landlord. All such movement shall be under
supervision of Landlord and in manner agreed between Tenant and Landlord by
prearrangement before performance. Such prearrangement initialed by Tenant will
include determination by Landlord and subject to its decision and control, as to
the time, method, and routing of movement and as to limitations imposed for
safety or other concerns which may prohibit any article, equipment or any other
item from being brought into the Business Park. Tenant is to assume all risk as
to damage to articles moved and injury to persons or public engaged or not
engaged in such movement, including equipment, property, and personnel of
Landlord if damaged or injured from time of entering property to completion of
work; and Landlord shall not be liable for acts of any person engaged in, or any
damage or loss to any of said property of persons resulting from any act in
connection with such service performed for Tenant.
3. No signs, advertisements or notices shall be painted or affixed on or to any
windows or doors, or other parts of the Business Park, except of such color,
size and style and in such places, as shall be first approved in writing by
Landlord. No nails, hooks, or screws shall be driven or inserted in any part of
the Business Park, except by the Business Park maintenance personnel, nor shall
any part be defaced by Tenant. All signs will be contracted for by Landlord for
Tenant at the rate fixed by Landlord from time to time, and Tenant will be
billed and pay for such service accordingly.
4. No portion of Tenant's area or any other part of the Business Park shall at
any time be used or occupied as sleeping or lodging quarters.
5. Tenant shall not place, install or operate in the Premises or in any part of
the Business Park, an engine or machinery, or maintain, use or keep any
inflammable, explosive, or hazardous material without prior written consent of
Landlord.
6. Landlord will not be responsible for lost of stolen personal property,
equipment, money, or jewelry from Tenant's area or public rooms regardless of
whether such loss occurs when the area is locked against entry or not.
7. No birds or animals shall be brought into or kept in or about Business Park.
8. Employees of Landlord shall not receive or carry messages for or to Tenant or
other person, no contract with or render free of paid services to Tenant or
Tenant's agents, employees, or invitees.
9. Landlord will not permit entrance to Tenant's offices by use of pass keys
controlled by Landlord to any person at any time without written permission by
Tenant, except employees, contractors, or service personnel directly supervised
by Landlord.
10. The entries, passages, doors, elevators, elevator doors, hallways shall not
be blocked or obstructed; no rubbish, litter, trash, or material of any nature
shall be placed, emptied or thrown into these areas; and such areas shall not be
used at any time except for ingress or egress by Tenant, Tenant's agents, or
invitees to or from the Premises.
11. Plumbing fixtures and appliances shall be used only for purposes for which
constructed, and no sweeping, rubbish, rags or other unsuitable material shall
be thrown or placed therein. Damage resulting to any such fixtures or
appliances from misuse by Tenant shall be had by Tenant, and Landlord shall not
in any case be responsible thereof.
12. Tenant shall not do, or permit anything to be done in or about the Business
Park, or bring or keep anything therein, that will in any way increase the rate
of fire or other insurance on the Business Park, or on property kept therein, or
obstruct or interfere with the rights of, or otherwise injure or annoy, other
tenants, or do anything in conflict with the valid pertinent laws, rules or
regulations of any governmental authority.
13. The Landlord desires to maintain the highest standards of environmental
comfort and convenience for the tenantry. It will be appreciated if any
undesirable conditions or lack of courtesy or attention are reported directly to
the management.
-------------------------------
INITIALS
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Landlord Tenant
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EXHIBIT "C" - Page Solo
<PAGE> 1
EXHIBIT 10.6
9/8/99
AGREEMENT OF SUBLEASE
between
NATIONAL WESTMINSTER BANK, PLC,
Sublandlord
and
INTELLIGENT INFORMATION INCORPORATED,
Subtenant
Premises:
Third Floor
181 Harbor Drive
Stamford, Connecticut
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. Subleasing of Premises..............................................................................1
2. Term................................................................................................2
3. Rents...............................................................................................2
4. Condition of the Premises...........................................................................4
5. Subtenant's Requirements............................................................................5
6. Allowance...........................................................................................8
7. Procedures for Payment of Allowance.................................................................9
8. Subordination to and Incorporation of the Lease....................................................11
9. Covenant of Quiet Enjoyment........................................................................16
10. Alterations .......................................................................................16
11. Security Deposit ..................................................................................16
12. Notices ...........................................................................................18
13. Electricity .......................................................................................19
14. Parking ...........................................................................................19
15. Signage ...........................................................................................19
16. Miscellaneous .....................................................................................19
17. Information Regarding Availability of Additional Space ...........................................21
</TABLE>
Exhibits
A Floor Plan of the Premises
B Landlord's Work
C List of Contractors
D Overlease
Schedules
7.1(c) Officer Affidavit
7.5 Lien Waiver
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<PAGE> 3
AGREEMENT OF SUBLEASE (this "Sublease"), made as of the 9th day of
September, 1999, between NATIONAL WESTMINSTER BANK, PLC, an English banking
corporation, having an office address at 101 Park Avenue, New York, New York
10178 ("Sublandlord"), and INTELLIGENT INFORMATION INCORPORATED, a Delaware
corporation, having an office address at One Dock Street, Stamford, Connecticut
("Subtenant")
RECITALS:
A. Harbor Vista Associates Limited Partnership, a Connecticut
limited partnership, as landlord ("Overlandlord") and Sublandlord, as tenant,
entered into a Lease Agreement, dated as of November 28, 1997 (the "Master
Lease"), pursuant to which Sublandlord subleased from Overlandlord certain
premises (the "Overlease Premises") located on the second and third floor of
the building known by the street address 181 Harbor Drive, Stamford,
Connecticut (the "181 Building").
B. Overlandlord and Sublandlord have entered into a First Amendment
of Lease dated as of September 8, 1999 (the Master Lease together with said
First Amendment of Lease are hereinafter collectively referred to as the
"Overlease").
C. Sublandlord desires to sublease to Subtenant, and Subtenant
desires to sublease from Sublandlord, the First Premises, the Second Premises
and the Third Premises on the terms and conditions contained herein.
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is mutually agreed as follows:
1. Subleasing of Premises.
1.1. Sublandlord hereby subleases to Subtenant, and Subtenant hereby
hires from Sublandlord, the Premises, as hereinafter defined, consisting of:
(a) a portion of the third floor of the Overlease Premises,
as shown on "Exhibit A" annexed hereto and made a part hereof and designated
thereon and referred to herein as the "First Premises";
(b) a second portion of the third floor of the Overlease
Premises, as shown on Exhibit A and designated thereon and referred to herein
as the "Second Premises"; and
(c) a third portion of the third floor of the Overlease
Premises, as shown on Exhibit A and designated thereon and referred to herein
as the "Third Premises."
1.2. For all purposes of this Sublease, the parties agree that the
Overlease Premises includes 40,906 square feet of rentable area, the First
Premises includes 10,000 square feet of rentable area, the Second Premises
includes 4,000 square feet of rentable area and the Third Premises includes
6,453 square feet of rentable area, regardless of actual measurements or
anything else to the contrary.
<PAGE> 4
1.3. The "Premises" for purposes of this Sublease means the First
Premises, the Second Premises, and the Third Premises collectively.
1.4. As used herein the term "Subtenant's Proportionate Share" refers
to a fraction the numerator of which is the number of square feet of rentable
area included in the Premises and the denominator of which is the number of
square feet of rentable area included in the Overlease Premises.
2. Term.
2.1. The term of this Sublease commences for the First Premises, the
Second Premises and the Third Premises on the date (the "Commencement Date")
which is the later of (i) the date on which the Overlandlord consents to the
Sublease, and (ii) the date on which Subtenant and Sublandlord have both
executed and delivered this Sublease. The term of this Sublease ends for the
First Premises, the Second Premises and the Third Premises on March 30, 2008
(the "Expiration Date") or on such earlier date upon which such term expires or
is terminated pursuant to any of the conditions or covenants of this Sublease
or pursuant to law.
2.2. Intentionally Omitted.
2.3. Subtenant, on the date on which the term of this Sublease
expires or is terminated, is required to vacate and surrender possession of all
portions of the Premises in the condition and otherwise as required pursuant to
Section 9.01(c) and Article 18 of the Incorporated Provisions. The provisions
of this Section 2.3 survive the expiration of the term, and any termination, of
this Sublease.
2.4. Upon request of either Subtenant or Sublandlord by notice given
to the other party after the First Rent Commencement Date is determined,
Subtenant and Sublandlord will execute a certificate confirming the dates which
constitute the Commencement Date and the First Rent Commencement Date (as
hereinafter defined); provided, however, that the failure of either Sublandlord
or Subtenant to execute and deliver such certificate does not in any way affect
any of the terms or conditions of this Sublease.
3. Rents.
3.1. Subtenant is required to pay to Sublandlord fixed annual rent
(the "Fixed Rent") as follows:
(a) for the First Premises, for the period commencing on the
date (the "First Rent Commencement Date") that is thirty (30) days after the
Commencement Date and ending on the day immediately preceding the second
anniversary of the Commencement Date, $250,000.00 per annum, payable in monthly
installments of $20,833.33;
(b) for the Second Premises, for the period commencing on the
date (the "Second Rent Commencement Date") that is sixty (60) days after the
Commencement Date and ending on the day immediately preceding the second
anniversary of the Commencement Date, in addition to any Fixed Rent payable
under Section 3.1(a) and 3.1(c), $100,000.00 per annum, payable in monthly
installments of $8,333.34;
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<PAGE> 5
(c) for the Third Premises, for the period commencing on the
date (the "Third Rent Commencement Date") that is one hundred twenty (120) days
after the Commencement Date and ending on the day immediately preceding the
second anniversary of the Commencement Date, in addition to any Fixed Rent
payable under Section 3.1(a) and 3.1(b), $161,325.00 per annum, payable in
monthly installments of $13,443.75;
(d) for the Premises, commencing on the second anniversary of
the Commencement Date and ending on the day immediately preceding the sixth
anniversary of the Commencement Date, $572,684.00 per annum, payable in monthly
installments of $47,723.67; and
(e) for the Premises, commencing on the sixth anniversary of
the Commencement Date and ending on the Expiration Date, $593,137.00 per annum,
payable in monthly installments of $49,428.08.
Each monthly installment of Fixed Rent is payable on the first day of each
calendar month during the term of this Sublease, except that $42,610.42,
constituting, and to be applied in payment of, the first monthly installment of
Fixed Rent for the First Premises, the Second Premises and the Third Premises,
is payable at the time of execution and delivery of this Sublease by Subtenant.
If the First Rent Commencement Date, the Second Rent Commencement Date and the
Third Rent Commencement Date occur on a date other than the first day of a
calendar month, then: (i) the Fixed Rent for each of the First Premises, the
Second Premises and the Third Premises, for each of the calendar months in
which any such Rent Commencement Date occurs, is payable on the first day of
the calendar month in which the applicable Rent Commencement Date occurs in an
amount that is prorated for the number of days in each such calendar month
after the applicable Rent Commencement Date; and (ii) on the first day of each
of the two (2) calendar months in which Fixed Rent is increased on a date other
than the first day of a calendar month in accordance with either Section 3.1(d)
or Section 3.1(e), Subtenant will pay to Sublandlord the Fixed Rent for each
such month in an amount equal to the sum of (y) the Fixed Rent payable prior to
the increase, prorated for the number of days in such calendar month prior to
the applicable increase in Fixed Rent, and (z) the Fixed Rent as increased in
accordance with either Section 3.1(d) or Section 3.1(e), prorated for the
number of days in such calendar month on and after the applicable increase in
Fixed Rent.
3.2. In addition to the Fixed Rent, commencing on the Commencement
Date and continuing for the entire term of this Sublease, Subtenant is required
to reimburse Sublandlord for all Additional Rent, as defined in the Overlease,
payable by Sublandlord with respect to Alterations made by or on behalf of
Subtenant (including Subtenant's Initial Work, as hereinafter defined) under
Section 7.06 of the Overlease and for Subtenant's Proportionate Share of all
Additional Rent, as defined in the Overlease, payable by Sublandlord under
Article 6 of the Overlease; provided, that to the extent any such Additional
Rent is calculated under Article 6 of the Overlease using a period before the
fiscal period of July 1, 1999 to June 30, 2000 for the definition of Base Taxes
or Base Expenses, such Additional Rent as so calculated is payable by
Sublandlord and not Subtenant. Subtenant's payments to Sublandlord under this
Section 3.2 are due on the dates on which Sublandlord's payments under Article
6 and Section 7.06, respectively, of the Overlease are due to Overlandlord. If
Sublandlord receives any refund (or credit) from Overlandlord in respect of any
amount paid by Subtenant under this Section 3.2,
-3-
<PAGE> 6
Sublandlord is required to provide Subtenant with a corresponding refund (or
credit), less any costs and expenses incurred by Sublandlord in connection with
obtaining the same.
3.3. In addition to the foregoing, Subtenant is required to bear and,
on demand, pay (or reimburse Sublandlord for) all other costs and expenses
(including all amounts payable under the Overlease) relating to the Premises or
the III Space or the III Antennae (as defined in the First Amendment of Lease
referred to above), or the use and occupancy of any thereof, or any act or
omission therein or with respect thereto, or any utility or service furnished
thereto. All of the foregoing constitutes additional rent. Without limiting the
generality of the foregoing, Subtenant must pay for any supplemental, overtime
or above building standard HVAC, maintenance, repair, electric or other service
for which a separate charge is made by Overlandlord or any third party.
3.4. As used herein the term "additional rent" refers to all sums of
money which are payable by Subtenant to Sublandlord or Overlandlord or
otherwise hereunder, other than Fixed Rent, and the term "rents" refers to
Fixed Rent and additional rent. All rents are payable in lawful money of the
United States at such place and to such person as Sublandlord from time to time
designates.
3.5. Subtenant must pay promptly all rents as and when the same
become due without set-off, offset or deduction of any kind whatsoever except
as otherwise provided for herein and, in the event of Subtenant's failure to
pay any additional rent when due, Sublandlord will have all of the rights and
remedies provided for herein or at law or in equity in the case of non-payment
of Fixed Rent.
3.6. Sublandlord's failure during the term of this Sublease to
prepare and deliver any statement or bill required or permitted to be delivered
to Subtenant hereunder, or Sublandlord's failure to make a demand under this
Sublease, is not in any way a waiver of, and will not cause Sublandlord to
forfeit or surrender, its rights to collect any rents which may have become due
from Subtenant pursuant to this Sublease. Subtenant's liability for rents
accruing during the term of this Sublease survives the expiration or sooner
termination of this Sublease.
4. Condition of the Premises. Subtenant represents that it has
examined (or waived examination of) the Premises and the III Space. Sublandlord
has not made and does not make any representations or warranties as to the
physical condition of the Premises or the III Space (including any latent
defects in or to the Premises or the III Space), the uses to which the Premises
or the III Space or the III Antennae may be put, or any other matter or thing
affecting or relating to the Premises or the III Space or the III Antennae,
except as specifically set forth in this Sublease. Subtenant agrees to accept
the Premises and the III Space in their "as is" condition as of the date hereof
as the same may be affected by reasonable wear and tear after the date hereof,
and, Sublandlord has no obligation whatsoever to alter, improve, decorate or
otherwise prepare the Premises or the III Space for Subtenant's occupancy or
use, except for Sublandlord's work as described in "Exhibit B" attached hereto
and made a part hereof.
-4-
<PAGE> 7
5. Subtenant's Requirements.
5.1. Subtenant intends to install, solely for Subtenant's use, a
computer room in the Premises and the III Antennae in the III Space, and
intends to improve and decorate the Second Premises and the Third Premises
(collectively, the "Subtenant's Initial Work"), all starting after the
Commencement Date for the purpose of Subtenant's initial occupancy and use of
the Premises. Subtenant's Initial Work is required to comply with this Section
5.1, the applicable provisions of Sections 8 and 10, Article 9 of the Overlease
and Sections 3.02(a), 3.02(b)(1), 3.02(b)(2), 3.02(c), and 3.02(d) of the
Overlease, including submission to and approval by Overlandlord and Sublandlord
of plans and specifications in compliance with said provisions. Subtenant's
Initial Work is considered Subtenant's Alterations, as defined in Section 10,
for purposes of this Sublease and is intended by Sublandlord and Subtenant to
be treated as "Tenant's Alterations" under the Overlease. Except as otherwise
expressly and specifically set forth in this Section 5, the terms, covenants,
agreements, provisions and conditions of this Section 5 are in addition to the
terms, covenants, agreements, provisions and conditions contained in Sections 8
and 10 and nothing in this Section 5 limits or qualifies the terms, covenants,
agreements, provisions and conditions of Sections 8 and 10.
5.2. All persons and firms employed by Subtenant for the performance
of Subtenant's Initial Work or any other Subtenant's Alterations are required
to have sufficient experience and financial capacity to perform and complete
all obligations under agreements with Subtenant and are required to be properly
licensed to the extent required by law. Subtenant must not employ any labor for
the performance of Subtenant's Initial Work or any other Subtenant's
Alterations that may cause any jurisdictional or other labor disputes in the
181 Building. In addition to their being approved or accepted by Overlandlord
under the Overlease, all contractors and materialmen employed for the
performance of Subtenant's Initial Work or any other Subtenant's Alterations
are subject to Sublandlord's prior approval, not to be unreasonably withheld,
conditioned or delayed. Subtenant is required to employ for performance of
Subtenant's Initial Work and any other Subtenant's Alterations a general
contractor reasonably acceptable to Sublandlord and Overlandlord, and Subtenant
is obligated to furnish Sublandlord with a copy of the executed contract for
Subtenant's employment thereof. The listing annexed hereto and made a part
hereof as "Exhibit C" identifies general contractors and other construction
contractors or materialmen that are approved by and acceptable to Sublandlord
as of the date of this Sublease.
5.3. Subtenant must not begin or proceed with any portion of
Subtenant's Initial Work or of any other Subtenant's Alterations unless
Subtenant has first obtained the approval of Sublandlord and, if required under
the Overlease, the approval of Overlandlord of complete working plans, drawings
and specifications for such portion of Subtenant's Initial Work or any other
Subtenant's Alterations (collectively, "Subtenant's Plans") fully showing all
work to be performed as part of such portion of Subtenant's Initial Work, or
any other Subtenant's Alterations, including, but not limited to, structural,
non-structural, mechanical, electrical and air conditioning work and any work
on other systems or facilities of the 181 Building. Subtenant's Plans are
required to be prepared by architects and engineers employed by Subtenant,
licensed in the State of Connecticut and maintaining at least $5,000,000 of
professional liability insurance. Sublandlord will not unreasonably refuse to
approve Subtenant's Plans submitted to Sublandlord in accordance with the
provisions of this Sublease for Sublandlord's review and approval. Subtenant's
Plans for Subtenant's Initial Work are subject to separate review and approval
by
-5-
<PAGE> 8
Sublandlord. The following additional provisions apply in connection with
Subtenant's requests for approval of Subtenant's Plans.
(a) For Subtenant's Initial Work, or any other Subtenant's
Alterations, Subtenant is required to submit to Sublandlord two (2) sets of
Subtenant's Plans for Sublandlord's review and a sufficient number of
additional sets thereof for Sublandlord to submit the same to Overlandlord as
required under the Overlease. Upon reasonable request by Subtenant from time to
time, Sublandlord will review plans, drawings and specifications as they are
being prepared for Subtenant in advance of the completion of Subtenant's Plans,
and within a reasonable time after submission thereof to Sublandlord,
Sublandlord will advise Subtenant of Sublandlord's comments concerning such
plans, drawings and specifications so submitted to Sublandlord.
(b) Following Sublandlord's receipt of any Subtenant's Plans,
submitted in accordance with this Section 5.3, Sublandlord will review the same
and cause the same to be reviewed and will, within twenty (20) Business Days
(as hereinafter defined) after such receipt, either (y) disapprove Subtenant's
Plans and return to Subtenant at least one set of Subtenant's Plans and provide
to Subtenant a statement setting forth in reasonable detail Sublandlord's
reasons for Sublandlord's disapproval of same, or (z) approve Subtenant's Plans
either at the same time as, or after, Overlandlord approves Subtenant's Plans
if Sublandlord, in its sole discretion, has determined that such approval
should be obtained. The term "Business Days" as used in this Sublease means all
days, except Saturdays, Sundays and the following holidays: New Year's Day,
President's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
(c) Within five (5) Business Days after Sublandlord's receipt
of any Subtenant's Plans, submitted in accordance with this Section 5.3,
Sublandlord will, pursuant to the provisions of the Overlease, forward the
required number of sets of Subtenant's Plans to Overlandlord for review and
action by Overlandlord in accordance with the provisions of the Overlease
unless Sublandlord determines, in its sole discretion, that submission of
Subtenant's Plans to Overlandlord is not required under the terms of the
Overlease; provided, however, that if at any time Sublandlord takes action as
described in clause (y) of Section 5.3(b), Subtenant's Plans with respect to
which such action is taken need not then be submitted by Sublandlord to
Overlandlord, or if the same has been previously submitted by Sublandlord to
Overlandlord, may be withdrawn by Sublandlord from such review by Overlandlord.
After submission by Sublandlord to Overlandlord of any Subtenant's Plans,
Sublandlord is required to notify Subtenant of any action or comments of
Overlandlord with regard to such Subtenant's Plans within three (3) Business
Days after Sublandlord receives notice from Overlandlord of such action or
comments.
(d) If Sublandlord takes action as described in clause (y) of
Section 5.3(b) with respect to any Subtenant's Plans, then Subtenant is
required to revise such Subtenant's Plans and resubmit the revised Subtenant's
Plans for review and action by Sublandlord and Overlandlord as provided above
in this Section 5.3; provided, that the period of twenty (20) Business Days
under Section 5.3(b) is ten (10) Business Days with respect to any such
resubmission of revised Subtenant's Plans.
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<PAGE> 9
(e) After Subtenant's Plans have been approved by Sublandlord
and, to the extent required under the Overlease, by Overlandlord, Subtenant
must not make any changes therein, other than minor corrections or minor
deviations, and perform no Subtenant's Alterations except in compliance with
said Subtenant's Plans, without the prior approval of Sublandlord and, to the
extent required by the Overlease, of Overlandlord.
(f) If Sublandlord, within the time required under this
Section 5.3, takes action under neither clause (y) nor clause (z) of Section
5.3(b) with respect to any Subtenant's Plans, Sublandlord is deemed to have
approved such Subtenant's Plans; provided, that Subtenant gives Sublandlord
written notice with the submission of the Subtenant's Plans including the
following statement in capital letters and bold type: "SUBLANDLORD'S FAILURE TO
RESPOND TO THIS NOTICE WITHIN [TWENTY (20)] [TEN (10)] BUSINESS DAYS IS DEEMED
TO AUTOMATICALLY CONSTITUTE SUBLANDLORD'S APPROVAL TO SUBTENANT'S PLANS
CONTAINED HEREIN."
5.4. Before proceeding with any Subtenant's Initial Work or any other
Subtenant's Alterations and after the approval by Sublandlord, and, if required
hereunder, by Overlandlord, of Subtenant's Plans therefor, Subtenant is
required to secure or cause to be secured, at Subtenant's sole cost and
expense, all necessary approvals of such Subtenant's Plans from all
Governmental Authorities, as hereinafter defined, having jurisdiction thereof
and also is required to secure or cause to be secured all permits and licenses
necessary to perform Subtenant's Initial Work and any other Subtenant's
Alterations and is required to furnish Sublandlord with four (4) copies of such
Subtenant's Plans as approved by such Governmental Authorities and four (4)
copies of such permits and licenses; provided, however, that prior to Subtenant
or any contractor employed by Subtenant filing any application with any
Governmental Authorities for such approval or for any permits or licenses
required to perform Subtenant's Initial Work or any other Subtenant's
Alterations, Subtenant is required to submit copies of such application to
Sublandlord for its and Overlandlord's prior approval. Provided any such
application has been properly prepared by Subtenant, Sublandlord agrees to
diligently cooperate with Subtenant, at no cost, risk or expense to
Sublandlord, to obtain Overlandlord's signature of such application to the
extent required by Governmental Authorities. The term "Governmental
Authorities" means any federal, state, county, municipal, or local government
or any quasi-governmental authority, now or hereafter created and all
departments, commissions, boards, bureaus, and offices thereof having or
claiming jurisdiction over the 181 Building or any portion thereof.
(a) With respect to any Subtenant's Initial Work and any
other Subtenant's Alterations, following compliance by Subtenant with its
obligations under the foregoing provisions of this Section 5, and after
furnishing to Sublandlord certificates evidencing that Subtenant and
Subtenant's contractors have obtained insurance as required under Section 8,
and evidence that Subtenant has complied with the provisions of Section 10,
Subtenant is required to proceed with diligence and without interruption to
complete and cause to be completed such Subtenant's Initial Work and such other
Subtenant's Alterations within a reasonable time, strictly in accordance with
Subtenant's Plans, as approved in accordance with the requirements of this
Section 5, in a good and workmanlike manner. Subtenant is required to perform
all of Subtenant's Initial Work and any other Subtenant's Alterations in a
manner so as not to interfere unreasonably with other contractors in the 181
Building.
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<PAGE> 10
(b) Subtenant is required to perform all of Subtenant's
Initial Work and any other Subtenant's Alterations within the Premises, except
as may be expressly provided for in Subtenant's Plans. Subtenant's Initial Work
and any other Subtenant's Alterations will in no event unreasonably interfere
with or impair Sublandlord's or other occupants' use of other portions of the
181 Building or their services, including, without limitation, Building
Systems, as hereinafter defined. Sublandlord, to the extent permitted under
Section 41 of the Overlease and subject to the provisions of Section 8, will
request the approval of Overlandlord for use by Subtenant of space in the
core(s) and shafts of the 181 Building, at locations shown on Subtenant's
Plans, for purposes of any of Subtenant's data transmission, telecommunications
and/or connections to a back-up generator that is part of Subtenant's Initial
Work, and for no other purposes, and Sublandlord will approve such use by
Subtenant hereunder to the extent Overlandlord gives its approval for such use.
Subtenant is required to, upon request, provide access to the Premises to
agents and representatives of Overlandlord and/or Sublandlord for purposes of
observing and/or inspecting the performance of the Subtenant's Initial Work or
any other Subtenant's Alterations for compliance thereof with the applicable
provisions of this Sublease and the Overlease. The term "Building Systems"
means the mechanical, gas, electrical, sanitary, heating, air-conditioning,
ventilating, elevator, plumbing, life-safety, roof and balcony drainage and
other service systems of the 181 Building.
(c) Sublandlord and/or Overlandlord may employ architects,
contractors or engineers for the purpose of reviewing Subtenant's Plans and
observing and inspecting any of Subtenant's Initial Work and any other
Subtenant's Alterations, and Subtenant is required to promptly reimburse
Sublandlord for all reasonable out-of-pocket expenses incurred by Sublandlord
therefor. Subtenant is required to promptly reimburse Overlandlord for any
expenses incurred by Overlandlord for Overlandlord's employment of architects,
contractors or engineers as referred to above in this Section 5, and for which
Overlandlord is entitled to reimbursement under the Overlease.
6. Allowance.
6.1. Subject to the following provisions of this Section 6 and the
provisions of Section 7, and for Subtenant's Initial Work, and for no other
Subtenant's Alterations, Subtenant will receive $100,000.00 (the "Allowance"),
as a build-out allowance to reimburse Subtenant for amounts ("Subtenant's Costs
for Initial Work") that Subtenant has actually paid to construction contractors
for construction of permanent leasehold improvements constituting part of
Subtenant's Initial Work theretofore completed, not including any amount paid
for moveable partitions, business or trade fixtures, furniture, furnishings or
other articles of personalty or paid for architectural, engineering, consulting
or other fees or for any other costs that are not hard costs of construction of
permanent leasehold improvements. Notwithstanding anything to the contrary,
Subtenant may not use any portion of the Allowance for any Subtenant's Initial
Work in the III Space or otherwise related to the III Antennae or for any costs
incurred with respect to any work performed in the First Premises or with
respect to the installation of any back-up generator or a computer room.
6.2. The parties acknowledge and agree that the entire amount of the
Allowance is expected to be provided by Overlandlord as part of "Landlord's
Maximum Contribution" as set forth in the Overlease. In no case will Subtenant
receive with respect to Subtenant's Initial Work
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any portion of the Allowance in an amount in excess of the amount of
Subtenant's Costs for Initial Work, and if Subtenant expends less than the
amount of the Allowance in payments for Subtenant's Costs for Initial Work,
then the amount of the Allowance will be reduced to such amount as Subtenant
actually expends in making such payments, and Subtenant will not receive, by
way of a credit against Fixed Rent or Additional Rent or otherwise, the
difference between the amount of the Allowance and the amount Subtenant has
actually expended in making such payments. Except for receipt by Subtenant of
the Allowance in accordance with this Sublease, Subtenant is obligated to pay
all costs of, related to, or arising from or as a result of, Subtenant's
Initial Work and any other Subtenant's Alterations.
7. Procedures for Payment of Allowance. Subtenant is required to
comply with the provisions of this Section 7 with respect to payments to
Subtenant of the Allowance.
7.1. From time to time during the prosecution of Subtenant's Initial
Work, but not more frequently than monthly, Subtenant may submit to Sublandlord
a written statement setting forth in such detail as Sublandlord requires by
notice given to Subtenant the amount of Subtenant's Costs for Initial Work
theretofore paid by Subtenant for Subtenant's Initial Work theretofore
completed and requesting reimbursement (not payment) for an amount equal to,
and not greater than, the excess, if any, of (y) the lesser of the amount of
the Allowance and the payments for Subtenant's Initial Work theretofore
completed and theretofore actually made by Subtenant for Subtenant's Costs for
Initial Work, over (z) the amounts previously received by Subtenant as part of
the Allowance. Subtenant is required to include with each such written
statement all of the following:
(a) copies of all invoices then received by Subtenant and
addressed to and payable by Subtenant in respect to Subtenant's Initial Work
that has been commenced and is not completed;
(b) a certification signed by Subtenant's Architect, as
hereinafter defined and employed with respect to the portion of Subtenant's
Initial Work relating to such Subtenant's Costs for Initial Work, certifying,
on the form of the American Institute of Architects form of Application And
Certificate for Payment (AIA Form G702), or any form published by the American
Institute of Architects which replaces or succeeds such form, that such portion
of Subtenant's Initial Work has been completed; and
(c) a correct and complete list of contractors,
subcontractors, materialmen and any other party employed in performing
Subtenant's Initial Work that has been commenced and is not completed and
entitled, under Connecticut law, to file a mechanic's or materialmen's lien
against all or any part of the 181 Building or the buildings located at 208
Harbor Drive or 262 Harbor Drive, Stamford, Connecticut, in the event payment
when due is not made for labor or materials provided in connection with
Subtenant's Initial Work, and an affidavit executed by an officer of Subtenant
in the form of Schedule 7.1(c) annexed hereto and made a part hereof and copies
of invoices from, and cancelled checks in the amount of such invoices payable
to, each such party so listed or copies of invoices for labor or materials in
connection with Subtenant's Initial Work marked paid by each such party so
listed.
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7.2. Within fifteen (15) calendar days after Sublandlord's receipt of
the written statement and accompanying material described in Section 7.1,
Sublandlord will review the same and either (i) notify Subtenant that
Sublandlord has identified no requirement of Sublandlord and/or Overlandlord
with respect thereto that the same fails to meet, or (ii) request that
Subtenant supplement or modify the same to meet the requirements of Sublandlord
pursuant to this Sublease and/or Overlandlord pursuant to the Overlease, in
which case, Subtenant is required to comply with Sublandlord's request and
resubmit to Sublandlord such written statement and accompanying material as so
supplemented and modified; provided, that in the case of the first written
statement and accompanying material submitted to Sublandlord and referred to
above in this sentence with respect to the Subtenant's Initial Work, such
period of fifteen (15) calendar days is instead thirty-five (35) calendar days.
In any case where clause (ii) of the preceding sentence applies, the provisions
of the preceding sentence apply to each resubmission by Subtenant to
Sublandlord under said clause (ii) until clause (i) of the preceding sentence
applies to the reimbursement request by Subtenant that is in question;
provided, that the period of fifteen (15) calendar days, or thirty-five (35)
calendar days, as the case may be, under such preceding sentence, is instead
five (5) Business Days with respect to any such resubmission to Sublandlord
under said clause (ii). If Sublandlord, within the time required under the
preceding provisions of this Section 7.2, takes no action under either clauses
(i) or (ii) of such provisions, then the period of thirty (30) days, or ten
(10) days, as the case may be, under Section 7.3 automatically begins to run on
the day following the required time under such preceding provisions.
7.3. Within thirty (30) calendar days after Sublandlord notifies
Subtenant as described in Section 7.2(i), which period is ten (10) calendar
days in the case of the first written statement and accompanying material
submitted to Sublandlord with respect to the Subtenant's Initial Work as
provided in Section 7.2, Sublandlord is required to pay to Subtenant the
applicable amount as described in the first sentence of Section 7.1.
7.4. If Overlandlord at any time pursuant to the Overlease requests
that any written statement or accompanying material described in Section 7.1 or
any Subtenant's Work Statement or other submission by Subtenant described in
Section 7.5 and submitted by Subtenant to Sublandlord be supplemented or
modified and (i) Sublandlord notifies Subtenant of such request, and (ii) such
request does not include a requirement that is materially different from the
requirements with which Subtenant is obligated to comply as described in
Section 6 and this Section 7, then Subtenant is required to comply with such
request by Overlandlord within a reasonable time after Sublandlord notifies
Subtenant thereof.
7.5. After Subtenant has completed the Subtenant's Initial Work,
Subtenant is required to submit to Sublandlord: (i) an affidavit executed by an
officer of Subtenant ("Subtenant's Work Statement") certifying that the
Subtenant's Initial Work, has been completed and setting forth in such detail
as Sublandlord requires by notice given to Subtenant all Subtenant's Costs for
Initial Work theretofore paid by Subtenant; (ii) copies of all invoices in
respect of Subtenant's Initial Work addressed to and payable by Subtenant and
not theretofore furnished to Sublandlord in respect of Subtenant's Initial
Work; (iii) complete "as-built" plans for the Subtenant's Initial Work, and a
certification signed by the architect(s) and/or engineer(s) employed with
respect to Subtenant's Initial Work and meeting the requirements for architects
and engineers as described in the second sentence of Section 5.3 (said
architect(s) and/or engineer(s) being referred to herein as "Subtenant's
Architect"), certifying, on the form of the
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American Institute of Architects form of Application And Certificate for
Payment (AIA Form G702), or any form published by the American Institute of
Architects which replaces or succeeds such form, that the Subtenant's Initial
Work, has been completed in accordance with Subtenant's Plans approved by
Sublandlord and Overlandlord; (iv) a correct and complete list of contractors,
subcontractors, materialmen and any other party employed in performing the
Subtenant's Initial Work, entitled, under Connecticut law, to file a mechanic's
or materialmen's lien against all or any part of the 181 Building or the
buildings located at 208 Harbor Drive or 262 Harbor Drive, Stamford,
Connecticut, in the event payment when due is not made for labor or materials
provided in connection with Subtenant's Initial Work, and copies of invoices
from, and cancelled checks in the amount of such invoices payable to, each such
party so listed or copies of invoices for labor or materials in connection with
Subtenant's Initial Work marked paid by each such party so listed and a lien
waiver in the form of Schedule 7.5 annexed hereto and made a part hereof duly
executed by each such party so listed, except that a lien waiver is not
required from any such party so listed for as long as any work of such party
which is part of Subtenant's Initial Work is in dispute or is not yet
completed; provided, that any such work in dispute or not yet completed is of
an insubstantial nature, that the nature and the amount of such disputed or
incomplete work is set forth in Subtenant's Work Statement and that the total
of all amounts in dispute with all parties so listed, each of which amounts is
identified in reasonable detail in Subtenant's Work Statement, must not exceed
$5,000.00 in the aggregate with respect to all such parties; and (v) originals
of all final approvals or certificates of completion or other certificates
required by applicable law to be obtained from any Governmental Authorities in
connection with Subtenant's Initial Work, or any portion thereof.
7.6. The obligation of Sublandlord to perform in accordance with any
and all of the foregoing provisions of this Section 7 and the provisions of
Sections 5 and 6 are conditioned on Subtenant not being in default under this
Sublease.
8. Subordination to and Incorporation of the Lease.
8.1. This Sublease is subordinate to the Overlease, and to all
leases, and mortgages and other rights or encumbrances to which the Overlease
is subordinate. This provision is self-operative, but Subtenant, within ten
(10) days of Sublandlord's request, must execute any instrument reasonably
requested by Sublandlord or Overlandlord to evidence or confirm the same.
Sublandlord will request that Overlandlord enter into a non-disturbance,
recognition and attornment agreement in a form reasonably acceptable to
Subtenant and Overlandlord and otherwise as provided in Section 19.06 of the
Overlease, and will request that Overlandlord obtain a similar agreement from
any lessor or mortgagee of Overlandlord, but neither Sublandlord nor
Overlandlord (a) is obligated to make any payment or incur any liability to
obtain any such agreement, unless Subtenant pays in advance to Sublandlord or
Overlandlord, as the case may be, an amount that is no less than such payment
or liability, or (b) is obligated to commence any litigation or otherwise
undertake unusual or inordinate measures to obtain any such agreement.
Subtenant must reimburse all reasonable costs, including reasonable attorneys'
fees, incurred by Sublandlord or Overlandlord in preparing or obtaining the
documentation required by this Section, except to the extent that any lessor or
mortgagee is an affiliate of Overlandlord.
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8.2. Sublandlord represents that a true and complete copy of the
Overlease (with certain information redacted therefrom) is annexed hereto as
"Exhibit D". If Sublandlord complies with its obligations under Section 8.3 and
if the Overlease nevertheless terminates for any reason, then this Sublease
will also terminate, without any liability of Sublandlord to Subtenant on
account thereof.
8.3. Sublandlord will not, as long as Subtenant is not in default
under this Sublease:
(a) do or approve anything that would cause the Overlease to
be canceled, terminated or forfeited, unless Overlandlord has agreed in the
case of any such cancellation, termination or forfeiture to provide
non-disturbance protection in favor of Subtenant on terms no less favorable to
Subtenant than the terms provided for in Section 19.06 of the Overlease;
provided, however, that nothing in this Section 8.3 will prevent Sublandlord
from exercising any option to cancel or terminate the Overlease pursuant to
Articles 12, 13, 38 and 40 thereof;
(b) enter into any amendment to the Overlease which prevents
or adversely affects the use of the Premises by Subtenant in accordance with
the terms of this Sublease or increases the obligations of Subtenant or
decreases Subtenant's rights under this Sublease; or
(c) permit a default under the Overlease to continue after
notice and an opportunity to cure so as to entitle the Overlandlord under the
Overlease to withhold any approval or consent which Subtenant has requested
pursuant to this Sublease.
8.4. Except as otherwise expressly provided in, or otherwise
inconsistent with, this Sublease, and except to the extent not applicable to
the Premises, all of the provisions of the Overlease (the "Incorporated
Provisions") are hereby incorporated in this Sublease by reference with the
same force and effect as if set forth at length herein: provided that except as
incorporated in this Sublease by provisions other than this Section 8.4, the
Incorporated Provisions do not include: (x) Articles 2, 25, 26, 30, 32, 34, 37,
39, 40 and 41; (y) Sections 3.01, 3.02(e), 3.02(f), 3.03(a), 4.01, 6.09, 7.06,
19.01(c), 19.03, 19.06, 20.01, 33.02, 36.01, 38.06, 38.07, 42.01, 42.03 and
42.04; and (z) Exhibits B-1, C, F-1 and F-2 and Schedules 3.01, 5.01, 6.09,
11.09, 37.01 and 42.01; and provided further that unless the context requires
otherwise:
(a) references in such provisions to Landlord are deemed to
refer to Sublandlord,
(b) references in such provisions to Tenant are deemed to
refer to Subtenant,
(c) references in such provisions to the Premises or the
Leased Premises are deemed to refer to the Premises hereunder,
(d) references in such provisions to fixed rent are deemed to
refer to the Fixed Rent hereunder,
(e) references in such provisions to other Incorporated
Provisions are deemed to refer to such Incorporated Provisions as incorporated
herein,
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<PAGE> 15
(f) references in such provisions to the Overlease are deemed
to refer to this Sublease, references in such provisions to superior leases are
deemed to refer to leases to which the Overlease is subordinate and references
in such provisions to mortgages or superior mortgages are deemed to refer to
mortgages to which the Overlease is subordinate,
(g) references in such provisions to subleases, sublettings
or subtenants are deemed to refer to undersubleases, undersublettings or
undersubtenants,
(h) whenever, pursuant to any of the Incorporated Provisions
as incorporated herein, Subtenant is required to furnish insurance,
indemnification or other similar protection to or for Sublandlord, or to take
some act as designated or directed by Sublandlord or to the satisfaction of
Sublandlord, Subtenant is required to furnish the same to or for Overlandlord
and Sublandlord, or to take the same as designated or directed by Overlandlord
or Sublandlord or to the satisfaction of Overlandlord and Sublandlord,
(i) whenever, pursuant to any of the Incorporated Provisions
as incorporated herein, Subtenant is required to obtain the consent or approval
of Sublandlord to or with respect to any act, omission or thing (e.g. to any
undersublease or assignment or to the making of any alterations, installations,
additions or improvements), Subtenant is required to obtain the consent or
approval of Overlandlord and Sublandlord to or with respect to such act,
omission or thing,
(j) whenever, pursuant to any of the Incorporated Provisions
as incorporated herein, Subtenant grants any release, waiver or similar thing
to Sublandlord, Subtenant is deemed to have granted the same to Overlandlord
and Sublandlord,
(k) whenever, pursuant to any of the Incorporated Provisions
as incorporated herein, Subtenant grants Sublandlord any right of entry, access
or use of the Premises, Subtenant is deemed to have granted such right to
Overlandlord and Sublandlord,
(l) any time period provided for in the Incorporated
Provisions is shortened or lengthened, as the case may be, as necessary so that
actions or omissions relating thereto may be coordinated with the corresponding
actions or omissions under the Overlease or performed within the time required
by the Overlease,
(m) if the Overlease provides that any Incorporated
Provisions survive the expiration or any termination of the Overlease, then
such Incorporated Provisions survive the expiration of the term, and any
termination, of this Sublease, and
(n) without limiting the generality of any of the foregoing
provisions of this Section 8.4, (A) in Article 3, references in Section 3.02(a)
to "Upgrades" are deemed deleted, (B) in Article 7, references in Section
7.03(a) to the sum of Fifty Million Dollars ($50,000,000.00) are deemed to
refer to the sum of Ten Million Dollars ($10,000,000.00), (C) in Article 9,
references in paragraph (b) of Section 9.01 to the sum of Two Hundred Fifty
Thousand Dollars ($250,000.00) are deemed to refer to the sum of Fifteen
Thousand Dollars ($15,000.00), (D) references to Landlord in Sections 10.02(a),
8.02, 11.01, 11.02, 11.03, 11.05, 11.09, 12.01, 12.05 and 12.06 are deemed to
be references to Overlandlord only, and (E) in Article 19, references to
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Tenant's Permitted Occupants are deemed deleted and references in Section 19.05
to fifty percent (50%) are deemed to refer to one hundred percent (100%).
8.5. Notwithstanding anything to the contrary contained in this
Sublease (including any of the Incorporated Provisions as herein incorporated),
Sublandlord is not obligated:
(a) to provide any of the services that Overlandlord has
agreed in the Overlease to provide or is required by law to provide, or
(b) to make any of the repairs or restorations that
Overlandlord has agreed in the Overlease to make or is required by law to make,
or
(c) to comply with any laws or requirements of public
authorities with which Overlandlord has agreed in the Overlease to comply, or
(d) to take or to refrain from taking any other action that
Overlandlord has agreed in the Overlease to take or to refrain from taking or
is required by law to take or to refrain from taking (including, in either
case, any obligations with respect to giving consents, approvals, etc.), or
(e) to perform any obligation that Overlandlord has agreed in
the Overlease to perform,
and Sublandlord has no liability to Subtenant on account of any failure of
Overlandlord (or Sublandlord) to provide, make, comply with, take, refrain from
taking, or perform any of the foregoing. With respect to Overlandlord's
performance of obligations and exercise of rights and powers in accordance with
the Overlease, to which reference is made in this Section:
(i) upon Subtenant's request and at Subtenant's
expense, Sublandlord must make continuing, good faith and
commercially reasonable efforts, without being obligated to
commence any arbitration or litigation against Overlandlord, to
(y) cause Overlandlord to perform, provide, make, comply with,
take, and exercise the same, and (z) recover compensation on
account of Overlandlord's failure to do so; provided, that prior
to Sublandlord commencing or continuing any such efforts at
Subtenant's specific request, Sublandlord may require that
Subtenant specifically agree to reimburse or that Subtenant
prepay Sublandlord's expenses by reason of such efforts, and
(ii) if any right or remedy of Sublandlord agai
Overlandlord or any duty or obligation of Overlandlord in either
case under any of the Incorporated Provisions is subject to or
conditioned upon Sublandlord's making any demand upon
Overlandlord or giving any notice, request or statement to
Overlandlord or taking any other similar action then, if
Subtenant so requests, Sublandlord, at Subtenant's expense (such
expense to be prepaid by Subtenant prior to Sublandlord
commencing or continuing to act under this clause (ii)), must
make such demand or request, give such notice or statement or
take such other action.
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Subtenant is required to defend, indemnify and hold harmless Sublandlord from
and against any and all loss, cost, damage and expense incurred by Sublandlord,
including reasonable attorney fees, under or in connection with (1) any such
efforts, pursuant to clause (i) above, or (2) any such demand, notice, request,
statement or similar action, pursuant to clause (ii) above. The provisions of
the preceding sentence and of Section 8.8 survive the expiration of the term,
and any termination, of this Sublease. Prior to taking or continuing to take
any action at Subtenant's request under this Section 8.5, Sublandlord, from
time to time, may require Subtenant to increase the amount of the security
deposit under Section 11 by such amount as Sublandlord reasonably determines in
order to secure the faithful performance by Subtenant of its obligations under
this Section 8.5.
8.6. Whenever Subtenant desires to do any act or thing which requires
the consent or approval of Sublandlord under any of the Incorporated Provisions
as incorporated herein:
(a) Subtenant must not do such act or thing without
first having obtained the consent or approval of Overlandlord and Sublandlord;
(b) Sublandlord is permitted to exercise its right to
withhold consent or approval independently of Overlandlord's exercise of its
right; provided, however, that if, in any instance, Overlandlord (i) is
required by the Overlease not to unreasonably withhold consent or approval, and
(ii) has granted such consent or approval, then Sublandlord may not
unreasonably withhold such consent or approval; and
(c) without limiting Sublandlord's right to withhold consent
or approval in any instance and notwithstanding any Incorporated Provision or
provision of law requiring Sublandlord to act reasonably, Sublandlord is
entitled, without liability to Subtenant on account thereof, to withhold
consent or approval whenever and for so long as Overlandlord withholds its
consent or approval, regardless of whether or not Overlandlord is entitled to
withhold such consent or approval and regardless of whether Overlandlord may
have liability to Sublandlord or Subtenant on account thereof; and
(d) Subtenant may not request Overlandlord's consent or
approval directly and neither Sublandlord's forwarding Subtenant's request to
Overlandlord nor Sublandlord's other efforts to obtain Overlandlord's consent
or approval constitutes Sublandlord's consent or approval, and the same will
not prejudice Sublandlord's right to withhold consent or approval.
8.7. Notwithstanding any other provision of this Sublease, Subtenant
must perform all of its obligations hereunder at such times, by such dates or
within such periods, and otherwise as required to avoid any default under the
Overlease or any breach or violation under the Overlease with respect to the
III Space or the III Antennae; provided, however, this Section 8.7 is not to be
applied so as to extend any time, date or period by or within which Subtenant
is otherwise required to perform. The obligation of Sublandlord to perform in
accordance with any and all of the provisions of this Section 8 is conditioned
on Subtenant not being in default under this Sublease.
8.8. Subtenant is required to indemnify Sublandlord from any loss,
cost, damage or expense (including reasonable attorneys fees) arising out of
any failure by Subtenant to perform
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any of its obligations under this Sublease, including any loss, cost, damage or
expense which may result from any default under or termination of the Overlease
arising by reason of any such failure.
9. Covenant of Quiet Enjoyment. Upon Subtenant paying any and all
rents (including additional rent) and observing and performing all the terms,
covenants and conditions on Subtenant's part to be observed and performed
hereunder, Subtenant may peaceably and quietly enjoy the Premises, subject
nevertheless to the terms and conditions of this Sublease, including but not
limited to Section 8.1 and the Incorporated Provisions, and to the Overlease
and the other leases, mortgages and other rights and encumbrances referred to
in Section 8.1.
10. Alterations.
10.1. The restrictions on, and other terms and conditions applicable
to, the making of any alterations, additions, installations, substitutions,
improvements or decorations in or about the Premises by or at the request of
Subtenant (referred to herein as "Subtenant's Alterations") as provided in the
Overlease are incorporated herein by reference, and as provided in Section 8.4,
the consent or approval of Overlandlord and Sublandlord is required for any
Subtenant's Alterations. Subtenant's Alterations may include the installation,
solely for Subtenant's use, of Antennae, as defined in Schedule A of the
Overlease, of a back-up generator and in the Premises, of a computer room,
subject to compliance with all other provisions of this Sublease and the
Incorporated Provisions as incorporated herein.
10.2. Subtenant must not commence or prosecute any alteration,
installation, addition or improvement in or to the Premises, including the
installation of a back-up generator and a computer room, unless, in addition to
having complied with all other provisions of this Sublease and the Incorporated
Provisions as incorporated herein, Subtenant has furnished to Sublandlord (a) a
fixed price general contract covering the same, and (b) payment and performance
bonds in favor of Sublandlord guaranteeing lien free completion of the work in
form, amount and issued by a surety satisfactory to Sublandlord in its
reasonable judgement. Additionally, if Overlandlord has the right under the
Overlease to require that any Subtenant's Alterations be removed at the end of
the term of the Overlease, then Subtenant, prior to commencing the same, must
increase the amount of the security deposit under Section 11 by such amount as
Sublandlord reasonably determines in order to secure the faithful performance
by Subtenant of its obligations to remove such Subtenant's Alterations.
11. Security Deposit
11.1. At the same time as or before Subtenant executes and delivers
this Sublease, Subtenant is required to deliver to Sublandlord, in cash, or by
a cashier's check or Subtenant's certified check, in either case drawn by or on
a bank that is a member of the New York Clearing House Association, and payable
to the order of Sublandlord, an amount no less than the Required Security
Amount, as hereinafter defined, as security for the faithful performance and
observance by Subtenant of the terms, covenants and conditions of this Sublease
on Subtenant's part to be observed and performed. Any amount held by
Sublandlord under this Section 11.1 or under Section 11.2 in the form of cash
("Cash Security") is required to be held by or on behalf of Sublandlord in an
interest bearing account at a bank or banks selected by Sublandlord and
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otherwise in accordance with any applicable laws. At the same time as Subtenant
delivers Cash Security to Sublandlord, Subtenant is required to deliver to
Sublandlord an executed W-9 form. Any interest earned on Cash Security will be
paid to Subtenant within sixty (60) days after the end of each calendar year
during the term of this Sublease less a one percent (1%) administrative fee, to
the extent permitted by applicable law, that Sublandlord will be entitled to
retain. Subtenant is responsible for the payment of any taxes associated with
interest on any Cash Security. If Subtenant defaults in the observance or
performance of any term, covenant or condition of this Sublease on Subtenant's
part to be observed or performed, including payment of Fixed Rent and
additional rent, beyond any applicable notice and cure period provided under
this Sublease, Sublandlord may use, apply or retain the whole or any part of
any Cash Security to the extent required for the payment of any rents with
respect to which Subtenant is in default, or for the payment of any sum that
Sublandlord may expend or incur because of Subtenant's default, including the
payment of any damages or deficiency in the reletting of the Premises, without
thereby waiving any other right or remedy of Sublandlord with respect to such
default, and Sublandlord shall hold the remainder of any Cash Security as
security for the faithful performance and observance by Subtenant of the terms,
covenants and conditions of this Sublease on Subtenant's part to be observed
and performed with the same rights as set forth above to use, apply or retain
all or any part of such remainder of such Cash Security. If Sublandlord uses,
applies or retains the whole or any part of any Cash Security under the
foregoing provisions of this Section 11.1 or under any of the provisions of
Section 11.2, Subtenant, promptly after notice thereof, shall pay to
Sublandlord in cash, or by a cashier's check or Subtenant's certified check, in
either case drawn by or on a bank that is a member of the New York Clearing
House Association, and payable to the order of Sublandlord, the sum necessary
to restore the Cash Security to an amount equal to the Required Security
Amount. A failure by Subtenant to so restore the Cash Security to an amount
equal to the Required Security Amount will constitute a material default by
Subtenant under the terms, covenants and conditions of this Sublease.
11.2. At any time during the term of this Sublease and as long as
Subtenant is not in default under this Sublease, Subtenant is permitted to
deliver to Sublandlord, in place of the Cash Security previously delivered by
Subtenant under this Sublease and as security for the faithful performance and
observance by Subtenant of the terms, covenants and conditions of this Sublease
on Subtenant's part to be observed and performed, an irrevocable negotiable
letter of credit issued by a commercial bank acceptable to Sublandlord in its
reasonable discretion in an amount no less than the Required Security Amount
and otherwise in a form and in substance acceptable to Sublandlord in its sole
discretion (the "Letter of Credit"). The Letter of Credit must be for a term of
not less than one year, must provide for partial drawings and must be renewed
by Subtenant no later than forty-five (45) days prior to its expiration and the
expiration of any replacement thereof, until Sublandlord is required to return
the Cash Security and/or Letter of Credit to Subtenant pursuant to the terms of
this Sublease, but in no event earlier than ninety (90) days after the
Expiration Date. Each such renewed Letter of Credit must be delivered to
Sublandlord no later than forty-five (45) days prior to the expiration of the
Letter of Credit then held by Sublandlord. If Subtenant defaults in its
observance or performance of any of its obligations under this Sublease beyond
any applicable notice and cure period, Sublandlord, in addition to all other
rights and remedies to which Sublandlord may be entitled under this Sublease,
has the right to draw on the Letter of Credit in one or more drawings for the
amount of
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any rents then due and for any other amount then due and payable to Sublandlord
under this Sublease. In the event of any drawing on the Letter of Credit,
Subtenant shall, within five (5) days after demand, cause the Letter of Credit
to be amended to restore the amount available thereunder to an amount equal to
the Required Security Amount. A failure by Subtenant to cause the Letter of
Credit to be amended to restore the amount available thereunder as provided in
the preceding sentence will constitute a material default by Subtenant under
the terms, covenants and conditions of this Sublease. The proceeds of any
drawing by Sublandlord under the Letter of Credit will be treated as Cash
Security as provided in Section 11.1, except that such proceeds may immediately
be used, applied and retained by Sublandlord to the extent required for the
payment of any rents with respect to which Subtenant is in default, or for the
payment of any sum that Sublandlord may expend or incur because of Subtenant's
default, including the payment of any damages or deficiency in the reletting of
the Premises, without thereby waiving any other right or remedy of Sublandlord
with respect to such default. In the event of a bank failure or insolvency
affecting the Letter of Credit, Subtenant is required to replace the Letter of
Credit within twenty (20) days after being requested to do so by Sublandlord.
11.3. As of the date on which Subtenant first delivers Cash Security
to Sublandlord as described in Section 11.1 and until there is a reduction in
the Required Security Amount in accordance with this Section 11.3, the Required
Security Amount is $400,000.00. Provided Subtenant is not in default hereunder,
the Required Security Amount is reduced to $150,000.00 as of the date which is
the first anniversary of the First Rent Commencement Date and the Required
Security Amount is reduced to $125,000.00 beginning on the date which is the
second anniversary of the First Rent Commencement Date and continuing
thereafter for the remainder of the Term, and for an additional period of
ninety (90) days after the Expiration Date. If Subtenant is not in default
hereunder, within thirty (30) days after each of the first anniversary and the
second anniversary of the First Rent Commencement Date on which the Required
Security Amount is reduced, Sublandlord will return to Subtenant an amount
equal to the difference between the Required Security Amount prior to the
reduction thereof and the reduced Required Security Amount.
12. Notices. Any notice, statement, demand, consent, approval,
advice or other communication required or permitted to be given, rendered or
made by either party to the other, pursuant to this Sublease or pursuant to any
applicable law or requirement of public authority concerning the Premises
(collectively, "Notice") must be in writing and will have been properly given,
rendered or made for purposes of this Sublease only if sent by personal
delivery, receipted by the party to whom addressed, or by a recognized
overnight courier, with receipt requested, or by pre-paid registered or
certified mail, return receipt requested, posted in a United States post office
station or depositary in the continental United States, and deemed given on the
date received, addressed:
(a) to Subtenant (i) prior to the Commencement Date,
at the address shown in the preamble to this Sublease,
Attention: Robert Unnold or (ii) on or after the Commencement
Date, at the Premises, Attention: Robert Unnold, or
(b) to Sublandlord, at its address first above
written, Attention: Mr. Charles Beach.
-18-
<PAGE> 21
Either party may, by Notice actually received by the other party, designate (y)
a different address in the United States for Notices intended for it, and (z)
require the other party to provide a copy of any Notices to any other person at
any other address in the United States.
13. Electricity.
13.1. Subtenant, at its sole cost and expense, must install and
maintain during the term of this Sublease such submeter(s) in the Premises as
needed to measure Subtenant's consumption of electricity therein. Subtenant
must pay to Sublandlord, within fifteen (15) days after demand by Sublandlord,
the amount charged to Sublandlord by Overlandlord for Subtenant's consumption
of electricity in the Premises as shown on said submeters, plus an
administrative charge equal to seven and one half percent (7 1/2%) of the
amount so charged by Overlandlord.
13.2. Sublandlord is not required to provide to Subtenant electricity
in excess of six (6) watts (connected) per square foot of rentable area of the
Premises.
14. Parking. Subtenant is allocated on a non-exclusive, unreserved
basis, without payment of any additional rent or charge, three (3) parking
spaces per 1,000 square feet of rentable area included in the Premises. Two (2)
of such parking spaces will be reserved for Subtenant's exclusive use.
Subtenant's use of such parking spaces is in all other respects subject to the
terms, provisions and conditions of Section 11.07 of the Overlease.
15. Signage. Subtenant may, at Subtenant's cost and expense and
with the prior written approval of Sublandlord and Overlandlord, install a
listing with Subtenant's name on the building directory in the lobby of the 181
Building and install in the elevator lobby of the third floor of the 181
Building a sign with Subtenant's name and logo or other similar corporate
identification.
16. Miscellaneous.
16.1. The obligations of Sublandlord hereunder accruing at any time
are binding only upon the owner, at that time, of the leasehold estate under
the Overlease, and each purchaser or transferee of such leasehold estate is
deemed to have assumed the obligations of Sublandlord hereunder accruing during
the period of its ownership.
16.2. Sublandlord has no liability to Subtenant on account of any
failure or refusal by Overlandlord to grant any approval or consent.
Sublandlord has no liability to Subtenant on account of any failure or refusal
by Sublandlord to grant any approval or consent. In any instance in which
Sublandlord is required by any provision of this Sublease (including any of the
Incorporated Provisions as incorporated herein) or applicable law to not
unreasonably withhold consent or approval, Subtenant's sole remedy is an action
for specific performance or injunction requiring Sublandlord to grant such
consent or approval, all other remedies which would otherwise be available
being hereby waived by Subtenant. In any such action, the prevailing party is
entitled to reimbursement of its legal fees from the other party. The
provisions of this Section 16.2 survive the expiration of the term, and any
termination, of this Sublease.
16.3. Subtenant represents and warrants to Sublandlord that Subtenant
has not dealt with any broker, agent or finder in connection with this Sublease
other than Cushman &
-19-
<PAGE> 22
Wakefield of Connecticut, Inc., and Subtenant hereby agrees to indemnify
Sublandlord against any claim for commission or other compensation in
connection with this Sublease made against Sublandlord by any broker, agent or
finder with whom Subtenant has dealt (other than Cushman & Wakefield of
Connecticut, Inc.), including attorneys fees incurred by Sublandlord in the
defense of any such claim. The provisions of this Section 16.3 survive the
expiration of the term, and any termination, of this Sublease.
16.4. This Sublease contains the entire agreement between the parties
and all prior negotiations and agreements are merged in this Sublease. Any
agreement hereafter made is ineffective to change, modify or discharge this
Sublease in whole or in part unless such agreement is in writing and signed by
the parties hereto. No provision of this Sublease is deemed to have been waived
by Sublandlord or Subtenant unless such waiver be in writing and signed by
Sublandlord or Subtenant, as the case may be. The covenants and agreement
contained in this Sublease bind and inure to the benefit of Sublandlord and
Subtenant and their respective permitted successors and assigns.
16.5. If any provision of this Sublease is held to be invalid or
unenforceable in any respect, it is intended that the validity, legality and
enforceability of the remaining provisions of this Sublease will not be
affected thereby.
16.6. The headings or captions in this Sublease are included only as
a matter of convenience and for reference, and in no way define, limit or
describe the scope of this Sublease nor the intent of any provisions thereof.
Capitalized terms used herein have the same meanings as are ascribed to them in
the Overlease, unless otherwise expressly defined herein. Unless otherwise
stated, all references in this Sublease to Sections are understood to refer to
Sections of this Sublease. The words "include" and "including", as used in this
Sublease, mean, in each case, "without limitation".
16.7. The parties acknowledge and agree (a) that each has substantial
business experience and is fully acquainted with the provisions of this
Sublease, (b) that the provisions and language of this Sublease have been fully
negotiated, and (c) that no provision of this Sublease shall be construed in
favor of any party or against any party by reason of such provision or this
Sublease having been drafted on behalf of one party rather than the other.
16.8. The submission of this document by Sublandlord to Subtenant
does not constitute an offer by Sublandlord, and Sublandlord is not bound in
any way unless and until this Sublease is executed and delivered by both
parties.
16.9. This Sublease is subject to Overlandlord's consent. Sublandlord
must request the same, but is not obligated to make any payment or incur any
obligation to obtain the same. Sublandlord and Subtenant agree to join in the
execution of the instrument of consent provided for in the Overlease.
-20-
<PAGE> 23
17. Information Regarding Availability of Additional Space. If at
any time after the Commencement Date but before the earlier of (a) the first
anniversary of the Commencement Date, and (b) the receipt by or on behalf of
Landlord of a bona fide offer from a prospective subtenant to sublease all or
any part of the second floor of the 181 Building (the "Possible Additional
Space") any general information for the marketing of the Possible Additional
Space is distributed by or on behalf of Landlord generally to the brokerage
community and/or business community possibly interested in the availability for
subletting of all or any part of the Possible Additional Space, then
Sublandlord will use reasonable efforts to cause a copy of such general
information to be sent by mail to Subtenant no later than fifteen (15) days
after such general distribution.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement of Sublease as of the day and year first above written.
SUBLANDLORD:
NATIONAL WESTMINSTER BANK, PLC,
By:
--------------------------------
Name:
Title:
SUBTENANT:
INTELLIGENT INFORMATION
INCORPORATED
By:
--------------------------------
Name:
Title:
-21-
<PAGE> 24
Exhibit A
FLOOR PLAN OF THE PREMISES
<PAGE> 25
Exhibit B
SUBLANDLORD'S WORK
1. Paint the First Premises (one finish coat with one undercoat) in
a mutually agreeable color.
2. Install in the First Premises a wall-to-wall loop-pile
commercial grade carpet in a mutually agreeable color, the cost of which is not
to exceed $21.00 per square yard.
3. Paint in a mutually agreeable color (one finish coat with one
undercoat) the walls and ceilings as of the date of this Sublease located in
the common corridors and lobby of the third floor of the Overlease Premises.
4. Install in the common corridors and lobby of the third floor of
the Overlease Premises a wall-to-wall loop-pile commercial grade carpet in a
mutually agreeable color, the cost of which is not to exceed $21.00 per square
yard.
<PAGE> 26
Exhibit C
LIST OF CONTRACTORS
<PAGE> 27
Exhibit D
COPY OF OVERLEASE
<PAGE> 1
EXHIBIT 10.7
BASIC LEASE INFORMATION
<TABLE>
<S> <C>
LEASE DATE: November 30, 1999
TENANT: Intelligent Information Incorporated, a Delaware corporation
ADDRESS OF TENANT: 305 N.E. Loop 820, Suite 600
Hurst, Texas 76053
CONTACT: Richard Rutkowski Telephone: (203) 969-0020
LANDLORD: Double Creek Capital Corporation
ADDRESS OF LANDLORD: 1600 West 7th Street, Suite LL1
Fort Worth, Texas 76102
CONTACT: Janet Loftin Telephone: (817)332-3538
PREMISES: Suite No.600 in the office building (the "BUILDING") located
on the land described as 305 N.E. Loop 820, City of Hurst,
Tarrant County, Texas and known as N.E. 820 BUSINESS TOWER
ONE, as more particularly described on Exhibit "A" (the
"LAND"). The Premises are outlined on the plan attached to
the Lease as Exhibit "B" and are deemed to contain 10,035
square feet of Rentable Space (as defined in said Exhibit
"B").
LEASE TERM: One hundred twenty (120) months, commencing February 1, 2000
(the "COMMENCEMENT DATE") and ending at 5:00 p.m., January
31, 2010, subject to adjustment and earlier termination as
provided in the Lease.
BASE RENTAL: $9,198.75 per month, which is based on an annual Base Rental
of $11.00 per rentable square foot per year, which Tenant
agrees to pay to Landlord in care of HBM&M Management at
1600 West 7th Street, Suite LL1, Fort Worth, Texas 76102 (or
at such other place as Landlord from time to time may
designate in writing) in advance and without demand on the
first day of each calendar month during and throughout the
Lease Term.
BASE EXPENSE AMOUNT: The amount of Operating Expenses (including the Operating
Expenses which Landlord elects to "gross-up" as provided in
Section 4(c) of the Lease) for the Building during the
calendar year 2000 on a "per square foot of Rentable Space
in the Building" basis.
PREPAID RENTAL: $9,198.75, representing payment of Base Rental for the first
month of the Lease Term, to be paid on the date of execution
of this Lease.
SECURITY DEPOSIT: $9,198.75 to be paid on the date of the execution of the
Lease, and held by Landlord pursuant to the provisions of
Section 29 of the Lease.
SOLE PERMITTED USE: General and executive office use and ancillary uses
(including the use of a portion of the Premises to operate a
communications/computer operations facility).
TENANT'S
PROPORTIONATE SHARE: 17.56121%, which is the percentage obtained by dividing (i)
the 10,035 rentable square feet in the Premises by (ii) the
57,143 rentable square feet in the Building.
</TABLE>
The foregoing Basic Lease Information is incorporated into and made a part of
the Lease identified above. lf any conflict exits between any Basic Lease
Information and the Lease, then the Lease shall control.
<TABLE>
<CAPTION>
LANDLORD: TENANT:
- --------- -------
<S> <C>
DOUBLE CREEK CAPITAL CORPORATION INTELLIGENT INFORMATION INCORPORATED
By: By:
------------------------------ ----------------------------------
Printed Name: Printed Name:
-------------------- ------------------------
Title: Title:
--------------------------- -------------------------------
</TABLE>
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE NO.
- ------- --------
<S> <C>
1. Definitions and Basic Provisions 1
2. Lease of Premises 1
3. Services by Landlord 1
4. Additional Rental 2
5. Electricity 3
6. Payments and Performance 3
7. Tenant Plans and Specifications - Installation of Improvements 3
8. Completion of Improvements and Commencement of Rent 3
9. [Deleted] 4
10. Repairs and Reentry 4
11. Assignment and Subletting 4
12. Alterations and Additions by Tenant 4
13. Legal use; Violations of Insurance Coverage Nuisance 4
14. Laws and Regulations 4
15. Indemnity Liability and Loss or Damage 5
16. Rules of the Building 5
17. Entry for Repairs and Inspection 5
18. Condemnation 5
19. Landlord's Lien and Security Interest 5
20. Abandoned Property 5
21. Holding Over 6
22. Fire and Casualty 6
23. Entire Agreement; No Representations or Warranties; No Memorandum of Lease 6
24. Transfer of Landlords Rights 6
25. Default 6
26. Waiver; Attorney's Fees 7
27. Quiet Possession 7
28. Severability 7
29. Security Deposit 7
30. No Subrogation; Insurance 7
31. Binding Effect 8
32. Notices 8
33. Brokerage 8
34. Subordination 8
35. Joint and Several Liability 8
36. Building Name and Address 8
37. Estoppel Certificates 8
38. Mechanic's Liens 8
39. Taxes and Tenant 's Property 9
40. Constructive Eviction 9
41. Landlord's Liability 9
42. Execution by Landlord 9
43. Miscellaneous 9
44. Applicable Law; Consent to Jurisdiction 9
</TABLE>
Exhibit A Legal Description
Exhibit B Floor Plan
Exhibit C Holidays
Exhibit D Leasehold Improvements Agreement
Exhibit E Acceptance of Premises Memorandum
Exhibit F Building Rules and Regulations
Exhibit G Insurance Coverage
Exhibit H Concealed Handgun Policy
Rider No. 101 Tenant's Option to Renew
Rider No. 102 N/A
Rider No. 103 Option to Expand and Right of First Refusal
Rider No. 104 N/A
Rider No. 105 Schedule of Base Rental
Rider No. 106 Lease Termination Option
Rider No. 107 Antenna and Generator License
<PAGE> 3
LEASE AGREEMENT
This Lease Agreement (the "LEASE") is made and entered into as of November
30, 1999, by and between Double Creek Capital Corporation, a Texas corporation
("LANDLORD") and Intelligent Information Incorporated, a Delaware corporation
("TENANT").
1. DEFINITIONS AND BASIC PROVISIONS. The definitions and basic provisions set
forth in the Basic Lease Information (the "Basic Lease Information") executed by
Landlord and Tenant contemporaneously herewith are incorporated herein by
reference for all purposes. The additional terms defined below shall have the
respective meanings stated when used elsewhere in this Lease, and such terms and
the following basic provisions constitute an integral part of this Lease:
(a) "NORMAL BUSINESS HOURS": From 8:00 a.m. until 5:00 p.m. on weekdays
(except Holidays, as defined on Exhibit "C" attached hereto and made a part
hereof for all purposes) and from 8:00 a.m. until noon on Saturday (except
Holidays).
(b) "RIDER": Collectively, Rider No(s) 101, 103, 105, 106 and 107, which
are attached hereto, contain additional provisions of this Lease, and are hereby
incorporated in, and made a part of, this Lease.
(c) "EXHIBITS": The following Exhibits are attached to and made a part
of this Lease for all purposes: "A" - Land; "B" - Definition of Rentable
Space/Premises; "C" - Holidays; "D" - Leasehold Improvements Agreement; "E" -
Acceptance of Premises Memorandum; "F" Building Rules and Regulations; "G"
Insurance Coverage; "H" - Concealed Handgun Policy.
(d) "TENANT'S PROPERTY" shall mean all fixtures, improvements,
additions, and other property installed at the sole expense of Tenant with
respect to which Tenant has not been granted any credit or allowance by
Landlord, which are not replacements of any property of the Landlord, whether
any such replacement is made at Tenant's expense or otherwise, and which can be
removed from the Premises without material damage to the Premises or the
Building. Without limiting the generality of the foregoing, all fixtures,
improvements, additions and other property installed by Tenant as part of
Tenant's operations center and which can be removed from the Premises without
material damage to the Premises or the Building shall be deemed to be Tenant's
Property. Tenant's Property does not include any electrical or water meters
installed by Tenant or any other upgrades to utility services provided to the
Premises, all of which shall become a part of the Premises upon installation.
2. LEASE OF PREMISES. In consideration of the obligation of Tenant to pay
rent as herein provided and in consideration of the other terms, covenants, and
conditions hereof, Landlord hereby demises and leases to Tenant, and Tenant
hereby leases and takes from Landlord, the Premises (exclusive of Tenant's
Property), together with the right to use in common with others the Common
Areas, for the Lease Term specified herein, all upon and subject to the terms
and conditions set forth herein. This Lease and the obligations of Landlord
hereunder are conditioned upon faithful performance by Tenant of all of the
agreements and covenants herein set out and agreed to by Tenant. Tenant agrees
and acknowledges that there are excluded from Tenant's use of the Premises
(whether the Premises are or include one or more full floors within the
Building) and Landlord hereby expressly reserves for its sole and exclusive use,
any and all mechanical, electrical, telephone and similar rooms, janitor
closets, elevator, pipe and other vertical shafts and ducts, flues, stairwells,
any area above the acoustical ceiling, and any other areas not specifically
shown on Exhibit "B" as being part of the Premises. So long as Tenant is not in
default under this Lease, Tenant shall have 24 hour access to the Premises
during the entire Lease Term (subject to any reasonable security requirements as
Landlord may establish from time to time).
3. SERVICES BY LANDLORD.
(a) As long as Tenant is not in default hereunder, Landlord agrees to
furnish those services and utilities to the Premises which are customarily
provided to tenants in comparable suburban office buildings located in the East
Tarrant County area, such determination to be made by Landlord in Landlord's
reasonable discretion. All of such services shall be provided at Landlord's cost
and expense during Normal Business Hours except as specifically provided to the
contrary elsewhere in this Lease. Services provided at times other than during
Normal Business Hours (including, without limitation, electricity for heating
and air conditioning which is not separately submetered as provided in Section 5
below) shall be at Tenant's cost and expense, with such charges to be
established by Landlord, in Landlord's reasonable discretion, and reimbursed to
Landlord on demand. As a part of the services and utilities to the Premises,
Landlord shall provide (i) automatic elevator service from the ground floor of
the Building to the Premises at all times, and (ii) reasonably adequate
quantities of hot and cold water to a point or points in the Premises for
ordinary lavatory, cleaning, and drinking purposes. If Tenant requires, uses or
consumes water for any purpose in addition to the ordinary lavatory, cleaning,
and drinking, Landlord may install a water meter and thereby measure Tenant's
consumption of water for all purposes. Tenant shall pay to Landlord the cost of
any such meter and its installation, and Tenant, at Tenant's sole cost and
expense, shall keep any such meter and any such installation equipment in good
working order and repair. Tenant shall pay for water consumed as shown on said
meter and sewer charges thereon, as and when bills are rendered. Landlord shall
also use reasonable efforts to limit the parking areas immediately surrounding
the Building to use by tenants of the Building and their employees and invitees.
1
<PAGE> 4
(b) Landlord reserves the right to stop the service of the air
conditioning, elevator, plumbing, electrical, sanitary, mechanical or other
service or utility systems of the Building when necessary by reason of accident
or emergency, or mechanical breakdown, or requirement of law or any cause beyond
Landlord's reasonable control or (except in case of emergency, upon three (3)
days prior written notice) for repairs, alterations, replacements, or
improvements, which in the judgment of Landlord, are desirable or necessary,
until the reason for such stoppage shall have been eliminated. To the extent
reasonably possible, Landlord shall confine all such stoppages to times other
than Business Hours. Any stoppage of said utilities and services resulting from
any cause whatsoever shall not render Landlord liable in any respect for damages
to either person, property or business, nor be construed as an eviction of
Tenant, nor entitle Tenant to any abatement of rent, nor relieve Tenant from
fulfillment of any covenant or agreement contained herein. Should any
malfunction of the Building improvements or facilities (which by definition do
not include any improvement or facilities of Tenant beside Building standard
improvements) occur for any reason, Landlord shall use reasonable diligence to
repair same promptly, but Tenant shall have no claim for rebate or abatement of
rent or damages on account of such malfunction or of any interruptions in
service occasioned thereby or resulting therefrom.
4. ADDITIONAL RENTAL.
(a) Tenant's Base Rental is based, in part, upon the assumption that
Landlord is contributing as its share of the annual Operating Expenses (as
defined in Section 4(d) hereof) of the Building an amount equal to (i) the Base
Expense Amount multiplied by (ii) the Rentable Space in the Premises. Tenant
shall during the Lease Term, pay an amount per square foot of Rentable Space
within the Premises ("TENANT'S ADDITIONAL RENTAL") equal to the excess from time
to time of the Operating Expenses per square foot of Rentable Space in the
Building over the Base Expense Amount. Prior to the commencement of each
calendar year of Tenant's occupancy, Landlord may make a good faith estimate of
the anticipated amount of Tenant's Additional Rental ("TENANT'S FORECAST
ADDITIONAL RENTAL") and Tenant agrees to pay Tenant's Forecast Additional Rental
in equal monthly installments in advance and without demand on the first day of
each calendar month during and throughout the Lease Term and any renewal or
extension thereof.
(b) Within 150 days after the end of each calendar year during the Lease
Term and any renewal or extension thereof, or as soon as reasonably possible
thereafter, Landlord shall provide Tenant a statement showing the Operating
Expenses for said calendar year and a statement prepared by Landlord comparing
Tenant's Forecast Additional Rental theretofore paid by Tenant with Tenant's
Additional Rental. In the event that Tenant's Forecast Additional Rental paid by
Tenant exceeds Tenant's Additional Rental for said calendar year, Landlord, at
Landlord's option, shall either pay Tenant an amount equal to such excess by
direct payment to Tenant within thirty (30) days of the date of such statement,
or credit such excess payment against the next accruing installment(s) of
Tenant's Forecast Additional Rental. In the event that the Tenant's Additional
Rental exceeds Tenant's Forecast Additional Rental for said calendar year,
Tenant shall pay Landlord, within thirty (30) days of receipt of the statement,
an amount equal to such difference. Such obligation of Landlord to refund and of
Tenant to pay shall survive expiration or termination of this Lease. Landlord's
statement showing Operating Expenses shall be conclusive and binding for all
purposes on Tenant as to any and all items contained therein to which Tenant has
not objected in writing to Landlord within thirty (30) days after Tenant's
receipt of such statement, which writing shall specify each item objected to and
the detailed reason for each such objection.
(c) Notwithstanding anything to the contrary contained herein, if the
Building is not fully occupied during any calendar year of the Lease Term,
Operating Expenses (or such components thereof as Landlord may reasonably
elect), Tenant's Forecast Additional Rental and Tenant's Additional Rental for
purposes of this Section 4 shall be determined as if the Building had been fully
occupied during such year and Operating Expenses had been in an amount which
would be normal if the Building were fully occupied. For the purposes of this
Lease, "FULLY OCCUPIED" shall mean occupancy of ninety-five percent (95%) of the
total Rentable space in the Building.
(d) The term "OPERATING EXPENSES" shall mean all costs of management,
operation (specifically including the cost of the electricity to the Building
and related improvements but not to those tenants' premises which are
submetered) and maintenance of the Land, the Building, and all other
improvements on the Land and any and all appurtenances thereto (the "COMMON
FACILITIES"), all accrued and based on an annual period consisting of a calendar
year. . The term "Operating Expenses" shall not include (i) taxes, special
assessments, franchise taxes or taxes imposed upon or measured by the income or
profits of Landlord (unless that tax is imposed in lieu of an ad valorem or
similar tax), (ii) debt service on mortgages, deeds of trust or other
encumbrances, (iii) any expense for which Landlord is otherwise actually
compensated through insurance, warranty, condemnation awards or is otherwise
compensated by any tenant, (iv) salaries and other compensation of personnel
above the grade of building manager (but specifically including compensation
paid to the building engineer and any building management company), (v) leasing
commissions, advertising, promotion costs, and other fees and expenses,
including, without limitation, legal fees, relating to procuring tenant's to
rent space in the Building and lease takeover costs, (vi) any costs that
duplicate costs for which Landlord is actually reimbursed by Tenant under the
provisions hereof or any other lessee of the Building, (vii) the cost of any
judgment, settlement, or arbitration award resulting from any liability of
Landlord and all expenses incurred in connection therewith, unless that
liability based on an expense which is otherwise included in Operating Expenses
, (viii) all costs incurred with the sale or transfer of all or any portion of
the Land/Building or any interest therein, (ix) costs incurred in connection
with curing any building code violations existing prior to the Commencement Date
which do not involve routine maintenance, (x) the cost of performing additional
services for any particular tenant to the extent that such services materially
exceed that provided to other lessees in the Building, (xi) costs incurred by
Landlord for alterations and additions which are considered capital improvements
or replacements under generally accepted accounting principles; (xii) Lessor's
general corporate overhead and general administrative expenses; (xiv) any cost
or expense in excess of $50,000 related to removal, cleaning, abatement or
remediation of hazardous material in and around the Building; (xiv) "takeover
expenses"; and (xv) the cost of any item which is, or should in accordance with
sound accounting practice be, capitalized on the books of Landlord, to the
extent such cost is not amortized by Landlord.
2
<PAGE> 5
5. ELECTRICITY. Tenant shall, at Tenant's expense, install any additional
electrical facilities for Tenant's use of the Premises in excess of those
existing as of the date of this Lease, along with an electrical meter to measure
Tenant's consumption of electricity. Tenant shall pay Landlord as Additional
Rent an amount equal to the difference between (a) the actual number of kilowatt
hours used by Tenant, multiplied by the average rate per kilowatt hour paid by
Landlord for the Building, and (b) $1.309 per rentable square feet in the
Premises. Landlord acknowledges Tenant's requirement that its business demands
up to twelve (12) watts of electrical energy per rentable square foot. Tenant
covenants that at no time shall the use of electrical energy in the Premises
(for any purpose, including without limitation for Building systems such as heat
and air conditioning) exceed the capacity of the existing feeders or writing
installations then serving the Premises, as determined by Landlord in its sole
discretion. Tenant shall not, without prior consent of Landlord in each
instance, make or perform, or permit the making or performing of, any alteration
to wiring installations or other electrical facilities in or serving the
Premises or any additions to the electrical fixtures, business machines, office
equipment, or other appliances in the Premises which utilize electrical energy.
Tenant shall be responsible at its sole cost, for any upgrade to the electrical
capacity available to the Premises that is necessary to satisfy Tenant's needs
and that is approved by Landlord.
6. PAYMENTS AND PERFORMANCE. Tenant agrees to pay all rents and sums provided
to be paid by Tenant hereunder at the times and in the manner herein provided,
without any setoff, deduction or counterclaim whatsoever. Should this Lease
commence on a day other than the first day of a calendar month or terminate on a
day other than the last day of a calendar month, the rent for such partial month
shall be proportionately reduced. The Base Rental for the first partial month,
if any, shall be payable at the beginning of said period or as Prepaid Rental.
The obligation of Tenant to pay such rent is an independent covenant, and no act
or circumstance whatsoever, whether such act or circumstance constitutes a
breach of covenant by Landlord or not, shall release Tenant from the obligation
to pay rent. Time is of the essence in the performance of all of Tenant's
obligations hereunder. Any amount which becomes owing by Tenant to Landlord
hereunder shall bear interest at the highest lawful rate per annum from the due
date until paid, unless there is no highest lawful rate of interest provided by
law with respect to such amount, in which event such amount all bear interest at
the rate of one and one-half percent (1 1/2%) per month from the due date until
paid. In addition, at Landlord's option, but only to the extent allowed by
applicable law and not in excess of the amount allowed by applicable law, Tenant
shall pay a late charge in the amount (as solely determined by Landlord) of up
to five percent (5%) of any installment of rental hereunder which is not paid
within five (5) days of the date on which it is due in order to compensate
Landlord for the additional expense involved in handling delinquent payments.
7. TENANT PLANS AND SPECIFICATIONS - INSTALLATION OF IMPROVEMENTS. Landlord
will install or cause to be installed in the Premises all improvements shown on
the Final Plans (as defined in Exhibit "D" attached hereto) upon the terms and
conditions set forth in the Leasehold Improvements Agreement attached hereto as
Exhibit "D" and made a part hereof.
8. COMPLETION OF IMPROVEMENTS AND COMMENCEMENT OF RENT. If the Premises are
not ready for occupancy by Tenant on the Commencement Date pursuant to the terms
of Exhibit "D", the obligations of Landlord and Tenant shall nevertheless
continue in full force and effect, including the obligation of Tenant to
commence paying rent on the Commencement Date, provided that if the Premises are
not ready for occupancy on the Commencement Date for any reason other than
Tenant's Delay (as defined in Exhibit "D"), then the rent shall abate and not
commence until the date the leasehold improvements to the Premises are
substantially complete or until the date Tenant commences occupancy of any
portion of the Premises, whichever first occurs (such first occurring date being
herein referred to as the "ACTUAL COMMENCEMENT DATE"). Any such abatement of
rent, however, shall constitute full settlement of all claims that Tenant might
otherwise have against Landlord by reason of the Premises not being ready for
occupancy by Tenant on the Commencement Date. If the Premises are not ready for
occupancy by Tenant on the Commencement Date, the number of months of the Lease
Term will remain as stated in the Basic Lease Information, and the Lease Term
will commence on the Actual Commencement Date. Notwithstanding the foregoing, if
Tenant, with Landlord's consent, occupies the Premises after substantial
completion of Tenant's leasehold improvements but prior to the beginning of the
Lease Term set forth herein, all of the terms and provisions of this Lease shall
be in full force and effect from the commencement of such occupancy and the
Lease Term shall commence on the earlier date on which Tenant first occupies the
Premises and shall expire the same number of months thereafter as shown in the
Basic Lease Information and no change shall occur in the length of the Lease
Term. By moving into the Premises or taking possession thereof, Tenant accepts
the Premises as suitable for the purposes for which the same are leased and
accepts the Building and every appurtenance thereof, and waives any and all
defects therein and on request from Landlord, Tenant shall promptly execute and
deliver to Landlord an Acceptance of Premises Memorandum in the form attached
hereto as Exhibit "E" and made a part hereof for all purposes. For purposes of
this Lease, the term "substantially complete" means that Landlord's Work has
been completed except for minor details of construction, decoration, or
mechanical adjustment which do not materially interfere with Tenant's use of the
Premises or items which Landlord cannot complete due to a Tenant Delay, which
includes Tenant's failure to install utility upgrades as provided in this Lease.
When Landlord's Work is substantially complete, Landlord and Tenant shall
prepare a punchlist specifically identifying those incomplete items.
Tenant recognizes that a portion of the Premises is currently leased to
another tenant which is in possession under a lease agreement permitting
Landlord to elect to relocate the tenant to other space in the Building. After
the execution of this Lease, approval of the Final Plans (in accordance with
Exhibit "D") and designation of the Equipment Area (in accordance with Rider
107), Landlord shall use reasonable efforts to exercise that relocation right
and move the other tenant to other space in the Building. Landlord shall not be
liable for the failure to give possession of the Premises on the Commencement
Date by reason of the holding over or retention of possession of any tenant,
tenants, or occupants, or for any other reason, and any such failure shall not
impair the validity of this Lease, or extend the Term, but the rent for the
Premises shall be abated until possession is delivered to Tenant, and such
abatement shall constitute full settlement of all claims that Tenant might
otherwise have against Landlord by reason of such failure to give possession of
the Premises to Tenant on the Commencement Date. If for any reason the other
tenant is not relocated
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within sixty (60) days after the date this Lease is fully executed, the Final
Plans approved and Equipment Area designated, then Tenant may, as its sole
remedy, terminate this Lease by written notice to Landlord at any time prior to
the date that Landlord has relocated the tenant, in which event neither Landlord
nor Tenant shall have any liability to the other party.
9. DELETED.
10. REPAIRS AND REENTRY. Tenant will, at Tenant's own cost and expense,
maintain and keep the Premises and any alterations and additions thereto in
sound condition and good repair, and shall pay for the repair of any damage or
injury done to the Building or any part thereof by Tenant or Tenant's agents,
employees and invitees; provided, however, that Tenant shall make no repairs to
the Premises without the prior written consent of Landlord. The performance by
Tenant of its obligation to maintain and make repairs shall be conducted only by
contractors approved by Landlord after plans and specifications therefor have
been approved by Landlord. Tenant will not commit or allow any waste or damage
to be committed on any portion of the Premises, and upon the termination of this
Lease by lapse of time or otherwise, Tenant shall deliver up the Premises to
Landlord in as good condition as at date of possession, ordinary wear and tear
excepted. Upon such termination of this Lease, Landlord shall have the right to
reenter and resume possession of the Premises. Notwithstanding the foregoing
provisions of this Section 10, any repairs to the Premises or the Building that
are necessitated because of any damage caused by fire or other casualty shall be
governed by the provisions of Section 22 below. Landlord shall be responsible
for maintenance to the exterior, structural and Common Areas of the Building. .
Landlord, at its own expense, shall keep and maintain the portions of the
Building not leased to tenants and all related fixtures, appurtenances, systems,
and facilities reasonably watertight and in good working order, condition, and
repair, and in material compliance with all laws, ordinances, orders, rules and
regulations of any governmental authority having jurisdiction over the use,
conditions or occupancy of the Premises except for (a) those repairs for which
Tenant is responsible pursuant to any other provision of this Lease, including,
but not limited to, this section, or (b) repairs to Tenant's Property.
11. ASSIGNMENT AND SUBLETTING. Tenant shall not assign its rights under this
Lease or sublet the premises in whole or in part or grant any license,
concession or other right of occupancy of any portion of the Premises, without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed. Any such assignment, mortgage or subletting without such
consent shall be void and shall, at the sole option of the Landlord, be deemed
an event of default by Tenant under this Lease. Notwithstanding any assignment
or subletting consented to by Landlord, Tenant and any guarantor of Tenant's
obligations under this Lease and each assignee shall at all times remain fully
responsible and liable for the payment of the rent herein specified and for
compliance with all of Tenant's other covenants and obligations under this
Lease. Tenant shall reimburse Landlord, on demand, for its reasonable attorneys'
fees and other expense incurred in connection with considering any request for
Landlord's consent to an assignment or sublease of the Premises. For purposes of
this Lease, a merger or consolidation with another entity, or a transfer of a
controlling interest in the stock or other equity interests in Tenant, shall
each be deemed an assignment of the rights of Tenant under the Lease, unless the
merger or consolidation is with, or the transfer is made to, an entity with a
tangible net worth (at the time of the merger, consolidation or transfer) at
least equal to that of Tenant as of the Commencement Date and which is acquiring
all or substantially all of Tenant's assets, except for any merger,
consolidation or transfer is for a good business purpose and not principally for
the purpose of transferring the leasehold estate created by this Lease.
12. ALTERATIONS AND ADDITIONS BY TENANT. Tenant shall make no alterations in
or additions to the Premises without the prior written consent of Landlord
(which consent may not be unreasonably withheld), and all alterations,
additions, and improvements made to or fixtures or improvements placed in or
upon the Premises by either party (except only moveable trade fixtures of Tenant
and other portions of Tenant's Property) shall be deemed a part of the Building
and the property of the Landlord at the time they are placed in or upon the
Premises, and they shall remain upon and be surrendered with the Premises as a
part thereof at the termination of this Lease, unless Landlord shall elect
otherwise, whether such termination shall occur by the lapse of time or
otherwise. In the event Landlord shall elect that certain alterations, additions
and improvements made by a Tenant in the Premises shall be removed by Tenant,
Tenant shall remove them and Tenant shall restore the Premises to its original
condition, at Tenant's own cost and expense, prior to the termination of the
Lease Term. Alterations and additions to the Premises will be performed by
Landlord at Tenant's cost and expense.
13. LEGAL USE; VIOLATIONS OF INSURANCE COVERAGE; NUISANCE. Tenant will not
occupy or use any portion of the Premises for any purpose other than the Sole
Permitted Use or for any purpose which in unlawful or which, in the reasonable
judgment of Landlord, is disreputable or which is hazardous due to risk of fire,
explosion or other casualty, nor permit anything to be done which will in any
way (i) increase the rate of fire and casualty insurance on the Building or its
contents, or (ii) tend to lower the character and reputation of the Building, or
(iii) create unreasonable elevator loads or otherwise interfere with standard
Building operations, or (iv) affect the structural integrity or design
capabilities of the Building. In the event that, by reason of any act or conduct
of business of Tenant, there shall be any increase in the rate of insurance on
the Building or its contents created by Tenant's acts or conduct of business,
then Tenant hereby agrees to pay Landlord the amount of such increase on demand.
Tenant shall not erect, place, or allow to be placed any sign, advertising
matter, stand, booth or showcase in, upon or visible from the vestibules, halls,
corridors, doors, outside walls, outside windows or pavement of the Building or
the Land without the prior written consent of Landlord. Tenant will conduct its
business, and control its agents, employees, and invitees in such a manner as
not to create any nuisance or interfere with, annoy or disturb other tenants or
Landlord in the management of the Building.
14. LAWS AND REGULATIONS. Tenant at its sole expense will maintain the
Premises in a clean and healthful condition and will comply with all laws,
ordinances, orders, rules and regulations of any governmental authority having
jurisdiction over the use, conditions or occupancy of the Premises.
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15. INDEMNITY, LIABILITY AND LOSS OR DAMAGE. Landlord shall not be liable to
Tenant or Tenant's agents, employees, guests, invitees or any person claiming
by, through or under Tenant for any injury to person, loss of or damage to
property or for loss of or damage to Tenant's business, occasioned by or through
the acts or omissions of Landlord or by any cause whatsoever except for any
thereof arising solely from or out of Landlord's gross negligence or willful
wrongdoing. Unless arising solely from or out of Landlord 's gross negligence or
willful wrongdoing Landlord shall not be liable for and Tenant shall indemnify
Landlord and save it harmless from all suits, actions, damages, liability and
expense in connection with loss of life, bodily or personal injury or property
damage arising from or out of any occurrence in, upon, at or from the Premises
or the occupancy or use by Tenant of the Premises or any part thereof or
occasioned wholly or in part by any action or omission of Tenant its agents,
contractors, employees, invitees, or licensees. Tenant acknowledges and agrees
that its indemnity obligations hereunder cover and relate to, without
limitation, any negligent action and/or omission (whether joint comparative or
concurrent) of Landlord and Landlord's agents, servants and employees. If
Landlord shall be made a party to any action commenced by or against Tenant,
Tenant shall protect and hold Landlord harmless therefrom and on demand shall
pay all costs, expenses and reasonable attorney's fees incurred by Landlord in
connection therewith.
16. RULES OF THE BUILDING. Tenant will comply fully, and will cause Tenant 's
agents, employees and invitees to comply fully with all Rules and Regulations of
the Building which are attached hereto as EXHIBIT "F" and made a part hereof as
though fully set out herein. As more particularly provided therein Landlord
shall at all times have the right to change such Rules and Regulations or to
amend them in such reasonable manner as Landlord may deem advisable for the
safety, protection, care and cleanliness of the Building and appurtenances and
for preservation of good order therein, all of which Rules and Regulations,
changes and amendments will be forwarded to Tenant in writing and shall be
complied with and observed by Tenant and Tenant's agents, employees and
invitees.
17. ENTRY FOR REPAIRS AND INSPECTION. Landlord and its agents and
representatives shall have the right to enter into and upon any and all parts of
the Premises at all reasonable hours (or, in an emergency, at any hour) to
inspect same or clean or make repairs or alterations or additions to the
Building and Premises (whether structural or otherwise) as Landlord may deem
necessary, and during the continuance of any such work, Landlord may temporarily
close doors, entryways, public spaces and corridors and interrupt or temporarily
suspend Building services and facilities, and Tenant shall not be entitled to
any abatement or reduction of rent by reason thereof. During the Lease Term,
Landlord may exhibit the Premises to prospective purchasers and lenders at
reasonable hours and upon prior notice to Tenant. Furthermore, during the
one-year period prior to the expiration date of this Lease, Landlord and
Landlord 's agents may exhibit the Premises to prospective tenants during Normal
Business Hours and upon prior notice to Tenant.
18. CONDEMNATION. If all of the Premises, or so much thereof as would
materially interfere with Tenant's use of the remainder, shall be taken or
condemned for any public use or purpose by right of eminent domain, with or
without litigation, or be transferred by agreement in connection with or in lieu
of or under threat of condemnation, then the Lease Term and the leasehold estate
created hereby shall terminate as of the date title shall vest in the condemnor
or transferee. If all or any portion of the Building is taken or condemned or
transferred as aforesaid, Landlord shall have the option to terminate this Lease
effective as of the date title shall vest in the condemnor or transferee.
Landlord shall receive the entire award from any taking or condemnation (or the
entire compensation paid because of any transfer by agreement), and Tenant shall
have no claim thereto.
19. LANDLORD 'S LIEN AND SECURITY INTEREST. Landlord shall have a Landlord 's
statutory lien, and in addition thereto Landlord shall have, and Tenant hereby
grants unto Landlord, a security interest in all of the goods, wares, furniture,
fixtures, office equipment, supplies and other property of Tenant now or
hereafter placed in, upon, or about the Premises and all proceeds thereof as
security for all of the obligations of Tenant under this Lease. Tenant shall not
remove any of said personal property from the Premises until all of Tenant's
obligations under this Lease have been satisfied in full. Upon the occurrence of
an event of default by Tenant, Landlord may, in addition to any other remedies
provided herein, enter upon the Premises and take possession of any and all
goods, wares, equipment, fixtures, furniture, improvements and other personal
property of Tenant situated on the Premises, without liability for trespass or
conversion, and sell the same at public or private sale with or without having
such property, at the sale after giving Tenant reasonable notice of the time and
place of any public sale or of the time after which any private sale is to be
made; and at any such sale the Landlord or its assigns may purchase unless
otherwise prohibited by law. The proceeds from any such disposition, less any
and all expenses connected with the taking of possession, holding and selling of
the property (including reasonable attorney 's fees and other expenses), shall
be applied as a credit against the indebtedness secured by the security interest
granted in this Section 19. Any surplus shall be paid to Tenant or as otherwise
required by law and Tenant shall pay any deficiencies forthwith to Landlord.
Upon request by Landlord, Tenant agrees to execute and deliver to Landlord a
financing statement in form sufficient to perfect the security interest of
Landlord in the aforementioned property and proceeds thereof under the
provisions of the Texas Uniform Commercial Code.
20. ABANDONED PROPERTY. All personal property of Tenant remaining in the
Premises after the termination or expiration of the Lease Term or after the
abandonment of the Premises by Tenant may be treated by Landlord as having been
abandoned by Tenant and Landlord, may at its option and election, thereafter
take possession of such property and either (i) declare same to be the property
of Landlord, or (ii) at the cost and expense of Tenant, store and/or dispose of
such property in any manner and for whatever consideration, Landlord, in its
sole discretion shall deem advisable. Tenant shall be presumed conclusively to
have abandoned the Premises of the amount of Tenant's property removed by Tenant
from the Premises is substantial enough to indicate a probable intent to abandon
the Premises and such removal is not in the normal course of Tenant's business,
or if Tenant removes any material amount of Tenant 's personal property from the
Premises, at a time when Tenant is in default in the payment of rental due
hereunder or in the performance of any other obligation of Tenant hereunder and
such removal is not in the normal course of Tenant 's business. Nothing
contained in this Section shall prejudice or impair Landlords rights as a
lienholder and secured party
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under Section 19 hereof, and the rights granted to Landlord under this Section
shall be cumulative of its rights as a lienholder and secured party.
21. HOLDING OVER. Should Tenant continue to hold the Premises after this Lease
terminates, whether by lapse of time or otherwise, such holding over shall,
unless otherwise agreed by Landlord in writing, constitute and be construed as a
tenancy at will at a daily rental equal to one-thirtieth (1/30) of an amount
equal to the greater of (i) double the amount of the monthly rental payable
during the last month prior to the termination of this Lease or (ii) 150% of the
rate for which similar space in the Building is then being leased by Landlord,
and upon and subject to all of the other terms and provisions set forth herein
except any right to renew this Lease, expand the Premises or lease additional
space. This provision shall not be construed, however, as permission by Landlord
for Tenant to holdover.
22. FIRE AND CASUALTY.
(a) If the Premises are damaged by fire or other casualty then in such
event Landlord shall, in its sole discretion, either (i) enter and make the
necessary repairs without affecting this Lease, or (ii) terminate this Lease by
giving written notice thereof to Tenant within sixty (60) days of such fire or
other casualty in which event Tenant shall pay the rent hereunder apportioned to
the time of such loss and shall pay all other obligations of Tenant owing on the
date of termination, and Tenant shall immediately surrender the Premises to
Landlord.
(b) In the event the Building is so badly damaged or injured by fire or
other casualty, even though the Premises may not be affected, that Landlord
decides, within ninety (90) days after such destruction, not to rebuild or
repair the Building (such decision being vested exclusively in the discretion of
Landlord), then in such event Landlord shall so notify Tenant in writing and
this Lease shall terminate as of the date specified for termination in the
notice from Landlord to Tenant, and the Tenant shall pay rent hereunder
apportioned to the date of such termination and shall pay all other obligations
of Tenant owing on the date of termination, and Tenant shall immediately
surrender the Premises to Landlord.
23. ENTIRE AGREEMENT AND AMENDMENT; NO REPRESENTATIONS OR WARRANTIES; NO
MEMORANDUM OF LEASE. This Lease contains the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes any and
all prior and contemporaneous agreements, understandings, promises, and
representations made by either party to the other concerning the subject matter
hereof and the terms applicable hereto. It is expressly agreed by Tenant, as a
material consideration to Landlord for the execution of this Lease, that there
have been no representations, understandings, stipulations, agreements or
promises pertaining to the Premises, the Building or this Lease not incorporated
in writing herein. This Lease shall not be altered, waived, amended or extended,
except by a written agreement signed by the parties hereto, unless otherwise
expressly provided herein. LANDLORD'S DUTIES AND WARRANTIES ARE LIMITED TO THOSE
SET FORTH IN THIS LEASE, AND SHALL NOT INCLUDE ANY IMPLIED DUTIES OR WARRANTIES,
ALL OF WHICH ARE HEREBY DISCLAIMED BY LANDLORD AND WAIVED BY TENANT. Neither
this Lease nor a memorandum of this Lease shall be recorded in the public
records of the county in which the Building is located without the prior written
consent of Landlord.
24. TRANSFER OF LANDLORD'S RIGHTS. In the event Landlord transfers its
interest in the Building, Landlord shall thereby automatically be released from
any further obligations hereunder, and Tenant agrees to look solely to the
successor in interest of Landlord for the performance of such obligations.
25. DEFAULT.
(a) The following events shall be deemed to be events of default (herein
so called) by Tenant under this Lease: (i) Tenant shall fail to pay any rental
or other sum payable by Tenant hereunder as and when such rental or other sum
becomes due and payable; provided, however, that Tenant shall be entitled to
receive, one (1) time each calendar year, a written notice of such failure from
Landlord and a five (5) day period thereafter to cure such payment default; (ii)
Tenant shall fail to comply with any other provision, condition or covenant of
this Lease and any such failure is not cured within fifteen (15) days after
Landlord gives written notice of such failure to Tenant; (iii) Tenant shall
desert, vacate or fail to physically occupy any substantial portion of the
Premises; (iv) Tenant shall assign this Lease or sublet all or any part of the
Premises or grant any license, concession or other right of occupancy or any
portion of the Premises, without the prior written consent of Landlord; (v) Any
petition shall be filed by or against Tenant or any guarantor of Tenant's
obligations under this Lease pursuant to any section or chapter of the present
federal Bankruptcy Act or under any future federal Bankruptcy Act or under any
similar law or statute of the United States or any state thereof (which as to
any involuntary petition shall not be and remain discharged or stayed within a
period of thirty (30) days after its entry), or Tenant or any guarantor of
Tenant 's obligations under this Lease shall be adjudged bankrupt or insolvent
in proceedings filed under any section or chapter of the present federal
Bankruptcy Act or under any future federal Bankruptcy Act or under any similar
law or statute of the United States or any state thereof; (vi) Tenant or any
guarantor of Tenant 's obligations under this Lease shall become insolvent or
make a transfer in fraud of creditors; (vii) Tenant or any guarantor of this
Lease shall make an assignment for the benefit of creditors; or (viii) a
receiver or trustee shall be appointed for Tenant or any guarantor of this Lease
or for any of the assets of Tenant or any guarantor of this Lease.
(b) Upon the occurrence of any event of default, Landlord shall have the
option to do any one or more of the following without any further notice or
demand, in addition to and not in limitation of any other remedy permitted by
law or by this Lease: (i) Enforce, by all legal suits and other means, its
rights hereunder, including the collection of Base Rental, Tenant's Additional
Rental and other sums payable by Tenant hereunder and the reimbursement for all
unamortized Tenant allowances and concessions, without reentering or resuming
possession of the Premises and without terminating this Lease; and (ii)
Terminate this lease by issuing written notice of termination to Tenant, in
which event
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Tenant shall immediately surrender the Premises to Landlord. Tenant shall pay to
Landlord as damages on the same days as Base Rental, Tenant's Additional Rental
and other payments which are expressed to be due under the provisions of this
Lease, the total amount of such Base Rental, Tenant's Additional Rental and
other payments plus a reimbursement for all unamortized Tenant allowances and
concessions, less such part, if any, of such payments that Landlord shall have
been able to collect from a new tenant upon reletting; provided, however, that
Landlord shall have no obligation to relet the Premises so as to mitigate the
amount for which Tenant is liable. Landlord shall have the right at any time to
demand final settlement. Upon demand for a final settlement, Landlord shall have
the right to receive, and Tenant hereby agrees to pay, as damages for Tenant's
breach, the difference between the total rental provided for in this Lease for
the remainder of the Lease Term and the reasonable rental value of the Premises
for such period, such difference to be discounted to present value at a rate
equal to the rate of interest allowed by law (at the time the demand for final
settlement is made) when the parties to a contract have not agreed on any
particular rate of interest (or, in the absence of such law, at the rate of 6%
per annum). Tenant agrees to reimburse Landlord immediately upon demand for any
expenses which Landlord may incur in its actions pursuant to this subsection,
and Tenant further agrees that Landlord shall not be liable for damages
resulting to Tenant from such action, whether caused by the negligence of
Landlord or otherwise. In addition to all remedies specified above, if Tenant is
delinquent in rentals or other monetary payments due under the Lease, Landlord
may enter upon the Premises and change, alter, or modify the door locks on all
entry doors of the Premises, and permanently or temporarily exclude Tenant, and
its agents, employees, representatives and invitees, from the Premises; and in
such event, Landlord shall not be obligated to provide Tenant with a key to
reenter the Premises until such time as all delinquent rent and other amounts
due under this Lease have been paid in full, and only during Landlord's Normal
Business Hours. Landlord's exclusion of Tenant from the Premises pursuant to the
immediately preceding sentence shall not constitute a permanent exclusion of
Tenant from the Premises or a termination of this Lease unless Landlord so
notifies Tenant in writing; moreover, Landlord shall not be obligated to place a
written notice on the Premises on the front door thereof explaining Landlord's
action or stating the name, address or telephone number of any individual or
company from which a new key may be obtained.
26. WAIVER; ATTORNEY'S FEES. Landlord's acceptance of rent following an event
of default hereunder shall not be construed as Landlord's waiver of such event
of default. No waiver by Landlord of any violation or breach of any of the
terms, provisions and covenants herein contained shall be deemed or construed to
constitute a waiver of any other violation or breach of any of the terms,
provisions and covenants herein contained. Forbearance by Landlord to enforce
one or more of the remedies herein provided upon an event of default shall not
be deemed or construed to constitute a waiver of any other violation or default.
The failure of Landlord to enforce any of the Rules and Regulations described in
Section 16 against Tenant or any other Tenant in the Building shall not be
deemed a waiver of any such Rules and Regulations. No provision of this Lease
shall be deemed to have been waived by Landlord unless such waiver is in writing
and is signed by Landlord. The rights granted to Landlord in this Lease shall be
cumulative of every other right or remedy which Landlord may otherwise have at
law or in equity, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies. If Landlord brings any action under this Lease, or consults or places
this Lease or any amount payable by Tenant hereunder with an attorney for the
enforcement of any of Landlord's rights hereunder, then Tenant agrees to pay to
Landlord on demand from Landlord the reasonable attorney's fees and other costs
and expenses incurred by Landlord in connection therewith.
27. QUIET POSSESSION. Landlord hereby covenants that Tenant, upon paying rent
as herein reserved, and performing all covenants and agreements herein contained
on the part of Tenant, shall and may peacefully and quietly have, hold and enjoy
the Premises without any disturbance from Landlord or from any other person
claiming by, through or under Landlord, subject to the terms, provisions,
covenants, agreements and conditions of this Lease, specifically including, but
without limitation, the matters described in Section 34 hereof.
28. SEVERABILITY. If any clause or provision of this Lease is illegal, invalid
or unenforceable under present or future laws effective during the Lease Term,
then and in that event, it is the intention of the parties hereto that the
remainder of this Lease shall not be affected thereby, and it is also the
intention of the parties to this Lease that in lieu of each clause or provision
that is illegal, invalid or unenforceable, there be added as a part of this
Lease a clause or provision as similar in terms to such illegal, invalid or
unenforceable clause or provision as may be possible and be legal, valid and
enforceable.
29. SECURITY DEPOSIT. The Security Deposit shall be held by Landlord without
liability for interest and as security for the performance by Tenant of Tenant's
covenants and obligations under this Lease, it being expressly understood that
the Security Deposit shall not be considered an advance payment of rental or a
measure of Landlord's damages in case of default by Tenant upon the occurrence
of any event of default by Tenant or upon termination of this Lease. Landlord
may commingle the Security Deposit with other funds. Landlord may, from time to
time, without prejudice to any other remedy, use the Security Deposit to the
extent necessary to make good any arrearages of rent or to satisfy any other
covenant or obligation of Tenant hereunder. Following any such application of
the Security Deposit, Tenant shall pay to Landlord on demand the amount so
applied in order to restore the Security Deposit to its original amount. If
Tenant is not in default at the termination of this Lease, the balance of the
Security Deposit remaining after any such application shall be returned by
Landlord to Tenant. If Landlord transfers its interest in the Premises during
the Lease Term, Landlord may assign the Security Deposit to the transferee and
thereafter shall have no further liability for the return of, or any other
matter relating to, such Security Deposit.
30. NO SUBROGATION; INSURANCE. (a) Tenant hereby waives any cause of action it
might have against Landlord on account of any loss or damage that is insured
against under any insurance policy that covers the Premises, Tenant's fixtures,
personal property, leasehold improvements or business and which names Tenant as
a party insured. Landlord hereby waives any cause of action it might have
against Tenant because of any loss or damage that is insured against under any
insurance policy that covers the Building or any property of Landlord used in
connection with the Building and which names Landlord as a party insured,
provided that if the cost of restoring the loss or damage exceeds the
7
<PAGE> 10
amount of property damage insurance proceeds paid to Landlord on account of the
loss or damage, Tenant shall remain liable to Landlord for the amount of such
excess. This provision is cumulative of Section 15 (b) Tenant shall procure and
maintain throughout the Lease Term a policy or policies of insurance, at its
sole cost and expense, insuring Tenant and Landlord against any and all
liability for injury to or death of a person or person, occasioned by or arising
out of or in connection with the use or occupancy of the Premises, the limits of
such policy or policies to be in an amount not less than $1,000,000.00 with
respect to injuries to or death of any one person and in an amount of not less
than $1,000,000.00 with respect to any one accident or disaster, and shall
furnish evidence satisfactory to Landlord of the maintenance of such insurance.
Tenant shall obtain a written obligation on the part of each insurance company
to notify Landlord at least ten (10) days prior to cancellation, expiration or
material alteration of such insurance. It is recommended that Tenant carry fire
and extended coverage insurance on its personal property, as Landlord shall in
no event be required to rebuild, repair or replace any part of the furniture,
equipment, personal property, fixtures and other improvements which may have
been placed by Tenant on or within the Premises.
31. BINDING EFFECT. The provisions of this Lease shall be binding upon and
inure to the benefit of Landlord and Tenant, respectively, and to their
respective heirs, personal representatives, successors and assigns, subject to
the provisions of Section 11, 24 and 41 hereof.
32. NOTICES. Any notice required or permitted to be given hereunder by one
party to the other shall be deemed to be given when deposited in the United
States mail, certified or registered, return receipt requested, with sufficient
postage prepaid, or hand delivered, addressed to the respective party to whom
notice is intended to be given at the address of such party set forth on the
Basic Lease Information. Either party hereto may at any time by giving written
notice to the other party in the aforesaid manner designate any other address,
which, in regard to notices to be given to Tenant, must be within the
continental United States, in substitution of the foregoing address to which any
such notice shall be given.
33. BROKERAGE. Tenant warrants that it has not had any dealings with any
broker or agent in connection with the negotiation or execution of this Lease
other than Chris Petta and Lawrence Gardner (the "BROKERS"), who shall be
compensated by Landlord under a separate agreement. Tenant agrees to indemnify
Landlord and hold Landlord harmless from and against any and all cost, expense
or liability for commissions or other compensation or charges claimed by any
other broker or agent with respect to this Lease.
34. SUBORDINATION. This Lease and all rights of Tenant hereunder are subject
and subordinate to any deed of trust, mortgage or other instrument of security
which does now or may hereafter cover the Building and the Land or any interest
of Landlord therein, and to any and all advances made on the security thereof,
and to any and all increases, renewals, modifications, consolidations,
replacements and extensions of any of such deed of trust, mortgage or instrument
of security. This provision is hereby declared by Landlord and Tenant to be
self-operative and no further instrument shall be required to effect such
subordination of this Lease. Tenant shall, however, upon demand at any time or
times execute, acknowledge and deliver to Landlord any and all instruments and
certificates that, in the judgment of Landlord, may be necessary or proper to
confirm or evidence such subordination, and Tenant hereby irrevocably appoints
Landlord as Tenant's agent and attorney-in-fact for the purpose of executing,
acknowledging and delivering any such instruments and certificates. Tenant
further covenants and agrees upon demand by Landlord's mortgage at any time,
before or after the institution of any proceedings for the foreclosure of any
such deed of trust, mortgage or other instrument of security, or sale of the
Building pursuant to any such deed of trust, mortgage or other instrument of
security or voluntary sale, to attorn to the purchaser upon any such sale and to
recognize and attorn to such purchaser as Landlord under this Lease.
35. JOINT AND SEVERAL LIABILITY. If there is more than one Tenant, the
obligations hereunder imposed upon Tenant shall be joint and several. If there
is a guarantor(s) of Tenant's obligations hereunder, the obligations of Tenant
shall be joint and several obligations of Tenant and each such guarantor, and
Landlord need not first proceed against Tenant hereunder before proceeding
against each such guarantor, nor shall any such guarantor be released from its
guarantee for any reason whatsoever, including, without limitation, any
amendment of this Lease, any forbearance by Landlord or waiver of any of
Landlord's rights, the failure to give Tenant or any such guarantor any notices,
or the release of any party liable for the payment or performance of any of
Tenant's obligations hereunder.
36. BUILDING NAME AND ADDRESS. Landlord reserves the right at any time to
change the name by which the Building is designated and its address, and
Landlord shall have no obligation or liability whatsoever for costs or expenses
incurred by Tenant as a result of such name change or address change of the
Building.
37. ESTOPPEL CERTIFICATES. Tenant agrees to furnish from time to time, within
five (5) business days following the request by Landlord or any successor to
Landlord or by the holder of any deed of trust or mortgage covering the Land and
Building or any interest of Landlord therein, an estoppel certificate signed by
Tenant in form and substance satisfactory to Landlord and any such lender, in
their sole discretion. In the event Tenant shall fail or neglect to execute,
acknowledge and deliver any such certificate, Landlord may, as the agent and
attorney-in-fact of Tenant, execute, acknowledge and deliver the same, and
Tenant hereby irrevocably nominates, constitutes and appoints Landlord as
Tenant's proper and legal agent and attorney-at-fact for such purpose. Such
power of attorney shall not terminate on disability of the principal.
8
<PAGE> 11
38. MECHANIC'S LIENS. Nothing contained in this Lease shall authorize Tenant
to do any act which shall in any way encumber the title of Landlord in and to
the Premises or the Building or any part thereof; and if any mechanic's or
materialman's lien is filed or claimed against the Premises or Building or any
part thereof in connection with any work performed, materials furnished or
obligation incurred by or at the request of Tenant, Tenant will promptly pay
same or cause it to be released or recorded.
39. TAXES AND TENANT'S PROPERTY. Tenant shall be liable for all taxes levied
or assessed against personal property, furniture or fixtures placed by Tenant in
the Premises. If any such taxes for which Tenant is liable are levied or
assessed value of Landlord's property is increased by inclusion of personal
property, furniture or fixtures placed by Tenant in the Premises, and Landlord
elects to pay the taxes based on such increase, Tenant shall pay Landlord upon
demand that part of such taxes for which Tenant is primarily liable hereunder.
40. CONSTRUCTIVE EVICTION. Tenant shall not be entitled to claim a
constructive eviction from the Premises unless Tenant shall have first notified
Landlord in writing of the condition or conditions giving rise thereto, and, if
the complaints be justified, unless Landlord shall have failed to remedy such
conditions within a reasonable time after receipt of said notice.
41. LANDLORD'S LIABILITY. The liability of Landlord to Tenant for any default
by Landlord under the terms of this Lease shall be limited to Tenant's actual
direct, but not consequential, damages therefor and shall be recoverable from
the interest of Landlord in the Building and the Land, and Landlord shall not be
personally liable for any deficiency. This clause shall not be deemed to limit
or deny any remedies which Tenant may have in the event of default by Landlord
hereunder which do not involve the personal liability of Landlord.
Notwithstanding anything to the contrary contained in this Lease, in the event
Landlord sells, assigns, transfers or conveys its interest in the Building and
the Land, Landlord shall have no liability for any acts or omissions that occur
after the date of said sale, assignment, transfer or conveyance.
42. EXECUTION BY LANDLORD. The submission of this Lease to Tenant shall not be
construed as an offer, and Tenant shall not have any rights with respect hereto
unless and until Landlord shall, or shall cause its managing agent to, execute a
copy of this Lease already executed and delivered by Tenant to Landlord, and
deliver the same to Tenant.
43. MISCELLANEOUS. The following provisions shall be applicable hereto: (i) no
waiver by Landlord of any of its rights or remedies hereunder, or otherwise,
shall be considered a waiver of any other or subsequent right of remedy of
Landlord; no delay or omission in the exercise or enforcement by Landlord of any
rights or remedies shall ever by construed as a waiver of any right or remedy of
Landlord; and no exercise or enforcement of any such rights or remedies shall
ever be held to exhaust any right or remedy of Landlord; (ii) this Lease is for
the sole benefit of Landlord, its successors and assigns, and Tenant, its
permitted successors and assigns, and it is not for the benefit of any third
party; words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires; and (iv) whenever a
period of time is herein prescribed for action to be taken by a party (other
than the payment of money), that party shall not be liable or responsible for,
and there shall be excluded from the computation for any such period of time,
any delays due to strikes, riots, acts of God, shortages and/or unavailability
of labor or materials, war, governmental laws, regulations or restrictions, or
any other cause of any kind whatsoever which are beyond the reasonable control
of that party.
44. APPLICABLE LAW; CONSENT TO JURISDICTION. THIS LEASE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF
THE UNITED STATES APPLICABLE TO TRANSACTIONS IN THE STATE OF TEXAS. TENANT
HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST IT WITH
RESPECT TO THIS LEASE MAY BE MAINTAINED IN THE COURTS OF TARRANT COUNTY, TEXAS
OR IN THE U. S. DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, AND TENANT
HEREBY CONSENTS TO THE JURISDICTION AND VENUE OF SUCH COURTS.
IN WITNESS WHEREOF, this Lease Agreement is entered into by the parties
hereto on the day and year first set forth above.
<TABLE>
<CAPTION>
LANDLORD: TENANT:
- --------- -------
<S> <C>
DOUBLE CREEK CAPITAL CORPORATION INTELLIGENT INFORMATION INCORPORATED
By: By:
---------------------------- ----------------------------------
Printed Name: Printed Name:
------------------ ------------------------
Title: Title:
------------------------- -------------------------------
</TABLE>
9
<PAGE> 12
EXHIBIT "A" TO LEASE AGREEMENT
Being Tract A and Tract B, Block 2 of 820 Northeast Addition, an addition to the
City of Hurst, Tarrant County, Texas.
Initialed: Landlord Tenant Exhibit A - Page 1
------------ ---------------
<PAGE> 13
EXHIBIT "B" TO LEASE AGREEMENT
The term "RENTABLE SPACE" shall be calculated as follows: (i) in the case of a
single tenancy floor, all floor area measured at the floor from the inside
surface of the outer glass line of the Building to the inside surface of the
opposite outer glass line excluding only the areas (the "SERVICE AREAS") used
for Building stairs, fire towers, elevator shafts, flues, vents, stacks, pipe
shafts and vertical ducts (which Service Areas shall be measured from the
mid-point of walls enclosing such Service Areas), but including any such Service
Areas which are for the specific use of the particular tenant such as special
stairs or elevators, plus an allocation of the square footage of the Building's
elevator machine rooms, mechanical and electrical rooms, and public lobbies, and
(ii) in the case of a floor to be occupied by more than one tenant, all floor
areas within the inside surface of the outer glass walls enclosing the Premises
and measured to the mid-point of the walls separating areas leased by or held
for lease to other tenants or from areas devoted to corridors, elevator foyers,
restrooms, mechanical rooms, janitor closets, vending areas and other similar
facilities for the use of all tenants on the particular floor (hereinafter
sometimes called the "COMMON AREAS"), but including a proportionate part of the
Common Areas located on such floor based upon the ratio which the tenant's
rentable space (excluding Common Areas) on such floor bears to be aggregate
rentable space (excluding Common Areas) on such floor, or other reasonable basis
determined by Landlord, plus an allocation of the square footage of the
Building's elevator machine rooms, mechanical and electrical rooms, and public
lobbies. No deductions from Rentable Space shall be made for columns or
projections necessary to the Building. The Rentable Space in the Premises has
been calculated on the basis of the foregoing definition and is hereby
stipulated for all purposes hereof to be as stated in the Basic Lease
Information, whether the same should be more or less as a result of minor
variations resulting from actual construction and completion of the Premises for
occupancy so long as such work is done in substantial accordance with the terms
and provisions hereof.
[FLOOR PLAN OF PREMISES TO BE ATTACHED AS EXHIBIT "B-1"]
[FLOOR PLAN OF RIGHT OF FIRST REFUSAL SPACE TO BE ATTACHED AS EXHIBIT "B-2"]
Initialed: Landlord Tenant Exhibit B - Page 1
--------------- -----------
<PAGE> 14
EXHIBIT "C" TO LEASE AGREEMENT
HOLIDAYS
January 1st New Years Day
Last Monday in May Memorial Day
July 4th Independence Day
First Monday in September Labor Day
Fourth Thursday in November Thanksgiving Holidays
plus Friday following
December 25th Christmas Day
Initialed: Landlord Tenant Exhibit C - Page 1
--------------- ------------
<PAGE> 15
EXHIBIT "D" TO LEASE AGREEMENT
LEASEHOLD IMPROVEMENTS AGREEMENT
1. LANDLORD'S WORK. Landlord agrees to do certain finish work to the Premises
("Landlord's Work") as described in this Exhibit. Promptly after the execution
of this Lease Landlord shall retain an architect, engineer or space planner to
prepare and submit to Tenant plans and specifications for completing Landlord's
Work (the "Plans"). Within five (5) days after the date Tenant receives the
Plans Tenant will inform Landlord in writing of its objections, if any, to the
Plans. Landlord shall then promptly after receipt of Tenant's objections make
any revisions it deems appropriate and resubmit the Plans for Tenant's approval.
The above procedure shall continue until the Plans are approved in writing by
Landlord and Tenant (the "Final Plans"). Tenant shall not unreasonably withhold
or delay its approval of the Final Plans.
2. CONSTRUCTION. Promptly after approval of the Final Plans and receipt of
all required permits, Landlord shall commence construction upon the Premises and
shall diligently perform Landlord's Work in substantial conformance with the
Final Plans. Tenant shall not occupy the Premises until Landlord's Work is
substantially complete. Any delay in the completion of Landlord's Work resulting
from any act or omission of Tenant or any employee, agent or contractor of
Tenant (or from Tenant's failure to promptly review and comment on the proposed
Plans) shall be deemed a "Tenant Delay".
3. FINISH ALLOWANCE. Subject to the conditions of this Exhibit, Landlord
shall pay for the cost of Landlord's Work, not to exceed $140,490.00 (the
"Finish Allowance"). Any cost of Landlord's Work over and above the Finish
Allowance and the cost of any additional work required by Tenant, if any, shall
be paid Tenant to Landlord upon demand. If Landlord reasonably believes that
Landlord's Work will cost in excess of the Finish Allowance, then Landlord may
demand that Tenant deposit the excess into an escrow account to insure payment
of the excess under terms reasonably acceptable to Landlord and Tenant.
4. SIGN. Tenant may, at Tenant's sole cost and expense, install one (1)
exterior sign advertising Tenant's business at the Premises on the north side of
the Building, subject to Landlord's approval of the size, style and exact
location of the sign. The sign installed by Tenant shall be installed,
maintained and removed at Tenant's sole cost and expense and strictly in
conformance with all legal requirements. After the first twelve (12) months of
the Lease Term, Tenant shall not have the right to install a sign on the
exterior of the Building, unless the sign being installed replaces a sign of
Tenant previously located on the exterior of the Building. Tenant's right to
install a sign shall be immediately revoked if for any reason the square feet of
the Premises leased to Tenant is reduced below 10,000 square feet.
If in the future Landlord elects to construct a monument sign for the
Building, then Tenant shall have the right to have its name listed on the
monument sign so long as (a) Tenant is not in default under the Lease, (b)
Tenant is leasing at least 10,000 square feet in the Building at that time, (c)
Tenant's size (based on the total square feet of the Premises then leased by
Tenant) when compared to other tenants in the Building is ranked equal to or
higher than the number of spaces available on the monument sign, and (d) Tenant
pays its proportionate share (based on the number of available names on the
monument sign) of the cost of purchasing, installing, repairing and maintaining
the monument sign. Nothing in this Lease obligates Landlord to construct a
monument sign at any time. If Landlord elects to install a monument sign, then
(i) Landlord shall have sole discretion as to the size, style and location of
the sign, (ii) Landlord shall give Tenant at least thirty (30) days prior
written notice of the potential construction and projected size, style, location
and costs, and (iii) Tenant must elect to have its name listed on, and
participate in the cost of, the sign within ten (10) days after receipt
Landlord's notice, or else Tenant will be deemed to have waived all of its
rights regarding the monument sign.
Initialed: Landlord Tenant Exhibit D - Page 1
--------------- -----------
<PAGE> 16
EXHIBIT "E" TO LEASE AGREEMENT
ACCEPTANCE OF PREMISES MEMORANDUM
This Acceptance of Premises Memorandum (this "MEMORANDUM") is entered into
on ___________________, by and between Double Creek Capital Corporation, as
Landlord ('LANDLORD"), and Intelligent Information Incorporated, as Tenant
("TENANT"). Unless other wise defined herein, all capitalized terms used herein
shall have the same meaning ascribed to such terms in the Lease (as hereinafter
defined).
A. Landlord and Tenant entered into a Lease Agreement dated October
___, 1999 (the "LEASE") whereby Landlord leased certain Premises located in the
Building to Tenant pursuant to certain terms and provisions more particularly
described therein.
B. Certain leasehold improvements to the Premises have been constructed
and installed for the benefit of Tenant in accordance with the terms and
conditions set forth in the Leasehold Improvements Agreement attached as Exhibit
"D" to the Lease.
C. As provided in Section 8 of the Lease, Tenant desires to take
possession of and accept the Premises subject to the terms and provisions
hereof.
NOW, THEREFORE, for and in consideration of the premises, and the mutual
covenants and agreements contained herein and in the Lease, Landlord and Tenant
hereby expressly covenant, acknowledge and agree as follows:
1. Landlord has fully completed Landlord's Work and all other leasehold
improvements, alterations or modifications to the Premises or the Building in
accordance with the terms of the Lease (including the Leasehold Improvements
Agreement), and the Premises are substantially complete. The Premises are
tenantable and ready for immediate occupancy by Tenant and Landlord has no
further obligation to install or construct any leasehold improvements,
modifications or alterations to the Premises.
2. The Commencement Date shall be _______________________. Pursuant to
the provisions of the Lease, the first monthly installment of Base Rental shall
become due and payable on __________________. The expiration date of the Lease
shall be ___________________.
3. The Premises contain approximately _______________ square feet of
Rentable Space.
4. Except as specifically set forth herein, as the date of this
Memorandum the Lease has not been modified, altered, supplemented, superseded or
amended in any respect. All terms, provisions and conditions of the Lease are
and remain in full force and effect, and are hereby expressly ratified,
confirmed, restated and reaffirmed in each and every respect.
IN WITNESS WHEREOF, this Memorandum is entered into by Landlord and Tenant
on the date first set forth above.
<TABLE>
<CAPTION>
LANDLORD: TENANT:
- --------- -------
<S> <C>
DOUBLE CREEK CAPITAL CORPORATION INTELLIGENT INFORMATION INCORPORATED
By: By:
-------------------------------- -----------------------------------
Printed Name: Printed Name:
---------------------- -------------------------
Title: Title:
----------------------------- --------------------------------
</TABLE>
Initialed: Landlord Tenant Exhibit E - Page 1
--------------- -----------
<PAGE> 17
EXHIBIT "F" TO LEASE AGREEMENT
BUILDING RULES AND REGULATIONS
1. Sidewalks, doorways, vestibules, corridors, stairways and other similar
areas shall not be obstructed by Tenant or used by Tenant for any purpose other
than ingress and egress to and from the Premises and for going from or to
another part of the Building.
2. Plumbing fixtures and appliances shall be used only for the purposes for
which designed, and no sweepings, rubbish, rags or other unsuitable materials
shall be thrown or placed therein. Damage resulting to any such fixtures or
appliances or surrounding areas from misuse by Tenant shall be repaired at the
sole cost and expense of Tenant, and Landlord shall not in any case be
responsible therefor.
3. No signs, advertisements or notices shall be painted or affixed on or to
any windows or doors or other parts of the Building except of such color, size
and style and in such places as shall be first approved in writing by Landlord.
No nails, hooks or screws shall be driven or inserted in any part of the
Building except by the Building maintenance personnel nor shall any part of the
Building be defaced by Tenant.
4. Landlord will provide and maintain an alphabetical directory of each
Tenant's firm name on the first floor (main lobby) of the Building and no other
directory shall be permitted unless previously consented to by Landlord in
writing.
5. Tenant shall not place any additional lock or locks on any doors in or to
the Premises without Landlord's prior written consent. Two keys to the locks on
the doors which access the Premises from the Common Areas shall be furnished by
Landlord to Tenant, and Tenant shall not have any duplicate keys made.
Additional keys required by Tenant shall be made by Landlord at Tenant's sole
expense. Upon termination of the Lease, Tenant shall return all keys to Landlord
and shall provide to Landlord a means of opening all safes, cabinets and vaults
being left with the Premises.
6. With respect to work being performed by Tenant in the Premises with the
approval of Landlord, Tenant will refer all contractors, contractor's
representatives and installation technicians rendering any service to them to
Landlord for Landlord's supervision, approval and control before the performance
of any contractual services. This provision shall apply to work performed in the
Building including, but not limited to, installation of telephones, telegraph
equipment, electrical devices and attachments, and any and all installation of
every nature affecting floors, walls, woodwork, trim, windows, ceilings,
equipment and any other physical portion of the Building. Tenant must have
Landlord's written approval prior to employing any contractor. Any and all such
contractors shall comply with these Rules and Regulations for such services
including, hut not limited to, insurance requirements. All work in or on the
Building shall comply with any and all codes. Tenant shall take no action which
would disturb the ceiling tiles or cause any work to be performed above the
acoustical ceiling in the Building.
7. Movement in or out of the Building of furniture or office equipment, or
dispatch or receipt by Tenant of any bulky materials, merchandise or materials
which require use of elevators or stairways, or movement through the Building
entrances or lobby shall be restricted to such hours as Landlord shall
designate. All such movement shall be under the supervision of Landlord and in
the manner agreed between Tenant and Landlord by prearrangement before
performance. Such prearrangement initialed by Tenant will include determination
by Landlord, and subject to its decision and control, as to the time, method and
routing of movement and as to limitations for safety or other concerns which may
prohibit any article, equipment or any other item from being brought into the
Building. Tenant is to assume all risk as to damage to articles moved and injury
to person or public engaged or not engaged in such movement, including
equipment, property and personnel of Landlord and other tenants if damaged or
injured as a result of acts in connection with carrying out this service for
Tenant from the time of entering the property to completion of work; and
Landlord shall not be liable for acts of any person engaged in, or any damage or
loss to any of said property or persons resulting from any act in connection
with such service performed for Tenant.
8. Landlord shall have the power to prescribe the weight and position of
safes and other heavy equipment, which shall, in all cases, be positioned to
distribute the weight and stand on supporting devices approved by Landlord. All
damage done to the Building by taking in or putting out any property of Tenant,
or done by Tenant's property while in the Building, shall be repaired at the
expense of Tenant.
9. Corridor doors, when not in use, shall be kept closed.
10. Tenant shall cooperate with Landlord's employees in keeping its Premises
neat and clean. Tenant shall not employ any person for the purpose of such
cleaning other than the Building's cleaning and maintenance personnel. Landlord
shall be in no way responsible to Tenant, its agents, employees or invitees for
any loss of property from the Premises or public areas or for any damage to any
property thereon from any cause whatsoever.
11. To insure orderly operation of the Building, no ice, mineral or other
water, towels, newspapers, etc. shall be delivered to the Premises except by
persons approved by Landlord in writing.
Initialed: Landlord Tenant Exhibit F - Page 1
--------------- -----------
<PAGE> 18
12. Should Tenant require telegraphic, telephonic, annunciator or other
communication service, Landlord will direct the electrician where and how wires
are to be introduced and placed and none shall be introduced or placed except as
Landlord shall direct. Electric current shall not be used to power in excess of
standard office use or heating without Landlord's prior written permission.
13. Tenant shall not make or permit any improper noises in the Building or
otherwise interfere in any way with other tenants or persons having business
with them.
14. Nothing shall be swept or thrown into the corridors, halls, elevator
shafts or stairways. No animals shall be brought into or kept in, on or about
the Premises.
15. No machinery other than standard office equipment shall be operated by
Tenant in its Premises without the prior written consent of Landlord, nor shall
Tenant use or keep in the Building any flammable or explosive fluid or
substance.
16. No portion of the Premises shall at any time be used or occupied as
sleeping or lodging quarters.
17. Landlord will not be responsible for money, jewelry or other personal
property lost or stolen in or from the Premises or public areas regardless or
whether such loss or theft occurs when the area is locked against entry or not.
18. The Premises shall not be occupied by an average of more than one (1)
person per 150 square feet of Rentable Space in the Premises without the prior
written consent of Landlord.
19. Landlord reserves the right to rescind any of these rules and regulations
and to make such other and further rules and regulations as in its judgment
shall from time to time be advisable for the safety, protection, care and
cleanliness of the Building, the use and operation thereof, the preservation of
good order therein and the protection and comfort of the tenants and their
agents, employees and invitees, which rules and regulations, when made and
written notice thereof is given to Tenant, shall be binding upon Tenant in like
manner as if originally herein prescribed.
Initialed: Landlord Tenant Exhibit F - Page 2
--------------- -----------
<PAGE> 19
EXHIBIT "G" TO LEASE AGREEMENT
TENANT'S INSURANCE
Tenant shall, at its sole expense, maintain in effect at all times during the
Lease Term, insurance coverage with limits not less than those set forth below
with insurers licensed to do business in Texas:
<TABLE>
<CAPTION>
Insurance Minimum Limits
--------- --------------
<S> <C>
A. Commercial General Liability $1,000,000 each
Bodily Injury/Property Damage occurrence or equivalent
</TABLE>
This policy shall be on a form acceptable to Landlord, endorsed to include
the Indemnitees as additional insureds, state that the insurance is primary over
any other insurance carried by Landlord, and shall include the following
coverages:
a) Premises/Operations;
b) Independent Contractors;
c) Broad Form Contractual in support of the Indemnity Section of
this Lease; and
d) Personal Liability with contractual and employee exclusions
removed.
Evidence of these coverages represented by Certificates of Insurance
issued by the insurance carrier must be furnished to Landlord prior to Tenant
moving in. Certificates of Insurance shall specify the additional insured status
mentioned above as well as the waivers of subrogation. Such Certificates of
Insurance shall state that Landlord will be notified in writing thirty days
prior to cancellation, material change, or non-renewal of insurance.
Initialed: Landlord Tenant Exhibit G - Page 1
--------------- ------------
<PAGE> 20
EXHIBIT "H" TO LEASE AGREEMENT
PROHIBITION OF CONCEALED
HANDGUNS, FIREARMS, AND
WEAPONS ON OR AROUND THE
BUILDING
IT IS THE POLICY OF THE OWNER OF THE BUILDING TO EXPRESSLY PROHIBIT CONCEALED
HANDGUNS, FIREARMS AND ANY WEAPONS TO BE CARRIED ONTO THE BUILDING , STORED FOR
ANY PERIOD OF TIME IN ANY TENANT'S PREMISES OR POSSESSED AT ANY TIME IN OR
AROUND THE BUILDING. THIS POLICY APPLIES TO ALL TENANTS AND VISITORS TO N.E. 820
BUSINESS TOWERS AND THEIR RESPECTIVE EMPLOYEES, CONTRACTORS, AGENTS AND
INVITEES. THIS PROHIBITION INCLUDES ALL PARTS OF THE BUILDING AND ALL ADJACENT
PARKING LOTS, SIDEWALKS, AND BUILDINGS, AND ANY VEHICLES LOCATED IN OR AROUND
THE BUILDING.
THE OWNER WILL NOT CONDONE ANY ACTS OR THREATS OF VIOLENCE AGAINST THE OWNER'S
EMPLOYEES, CUSTOMERS, OR VISITORS ON THE OWNER'S PREMISES AT ANY TIME OR WHILE
THEY ARE ENGAGED IN BUSINESS WITH OR ON BEHALF OF THE OWNER, ON OR OFF THE
OWNER'S PREMISES.
Initialed: Landlord Tenant Exhibit H - Page 1
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<PAGE> 21
RIDER NO. 101
TENANT'S OPTION TO RENEW
Tenant may, at its option and subject to the terms hereof, renew the Lease
Term for one (1) additional term of sixty (60) months, provided that this Lease
must be in full force and effect and no event of default, or event or conditions
which, with the giving of notice, the passage of time, or both, could mature
into an event of default, may exist under this Lease at the time of exercise of
such option or at the time the renewal term would begin. Such renewal shall be
upon the same terms and conditions as provided elsewhere in this Lease, except
that (i) this Lease may not be renewed more often than as set forth above, (ii)
Landlord shall have no obligation to install improvements in the Premises, and
(iii) the annual Base Rental for such renewal period(s), and each monthly
installment thereof, shall be determined as provided below. Each such option
shall be exercised by Tenant giving notice to Landlord by certified mail, return
receipt requested, at least six (6) months prior to the end of the then-existing
term, and, if not so exercised, such option not so exercised and any subsequent
option to renew shall automatically expire and terminate. Notwithstanding
anything to the contrary contained herein, Tenant's option herein shall be
subject to a determination by Landlord, at Landlord's sole discretion, that
Tenant's financial condition at the time it makes such election is comparable or
better than the financial condition of Tenant at the time Tenant had executed
the Lease. If Tenant so elects to renew the Lease Term, following Tenant's
exercise of such renewal option, upon request from Landlord, Tenant and Landlord
will enter into a renewal agreement by which this Lease will be renewed in
accordance with the terms set forth in this Rider.
The annual Base Rental for each renewal period shall be the Prevailing
Building Rental Rate, which shall mean the annual rental rate then being charged
by Landlord in the Building for space comparable to the Premises, as determined
by Landlord, taking into consideration use, location and floor level within the
Building, rental concessions then being granted by Landlord under similar
circumstances, base year and/or expense stop calculations, the date the
particular rate under consideration is to become effective, and the term of the
lease under consideration. However, it is specifically agreed that for the
purposes of Tenant's renewals option only, no concession or allowance for
installation of Tenant improvements or moving expenses will be included in
determining the Prevailing Building Rental Rate, inasmuch as Tenant will already
be in possession and leasehold improvements will already have been installed in
Tenant's Premises.
Initialed: Landlord Tenant Rider No. 101 - Page 1
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<PAGE> 22
RIDER NO. 103
OPTION TO EXPAND AND RIGHT OF FIRST REFUSAL
1. OPTION TO EXPAND. Subject to the terms of this Rider, Tenant has the
option (the "EXPANSION OPTION") during the Expansion Period (defined below) to
lease all or portions of the Potential Expansion Space (defined below) for a
term beginning on the Effective Date (as hereinafter defined) and ending
contemporaneously with the expiration of the Lease Term (unless sooner
terminated pursuant to the terms of this Lease, and subject to any rights of
extension contained in this Lease). In order to exercise the Expansion Option,
Tenant must notify Landlord in writing during the Expansion Period that it is
exercising its Expansion Option, designating which portions of the Potential
Expansion Space which Tenant desires to lease.
2. RIGHT OF FIRST REFUSAL. Subject to the terms of this Rider, Tenant has a
right of first refusal (the "RIGHT OF FIRST REFUSAL") during the Expansion
Period to lease all or portions of the Potential Expansion Space for a term
beginning on the Effective Date (as hereinafter defined) and ending
contemporaneously with the expiration of the Lease Term (unless sooner
terminated pursuant to the terms of this Lease, and subject to any rights of
extension contained in this Lease). If Landlord enters into negotiations with an
existing tenant in the Building or a prospective tenant to lease all or any part
of the Expansion Space (or if an existing tenant of the Potential Expansion
Space desires to extend the term of its lease thereof), Landlord shall notify
Tenant of such fact and shall include in such notice the Prevailing Building
Rental Rate for comparable space. Tenant shall have a period of three (3)
business days from the date of delivery of such notice to notify Landlord
whether Tenant elects to exercise the right granted hereby to lease the portion
of the Potential Expansion Space proposed to be leased to the third party (the
"TRIGGERED REFUSAL SPACE"). If Tenant fails to give any notice to Landlord
within the required three (3) business day period, Tenant shall be deemed to
have refused its right to lease the Triggered Refusal Space.
If Tenant so refuses its right to lease the Triggered Refusal Space
(either by giving written notice thereof or by failing to give any notice),
Landlord shall have the right to lease all or any portion of the Triggered
Refusal Space to an existing tenant in the Building or a prospective tenant (or
to extend the term of the lease of an existing tenant) on such terms and
provisions as may be acceptable to Landlord. If Tenant so refuses its right to
lease the Triggered Refusal Space, then if Landlord shall enter into a lease
with a prospective tenant (or extend the term of the lease of an existing
tenant) for all or any part of the Triggered Refusal Space, Tenant's Expansion
Option and Right of First Refusal as to that Triggered Refusal Space shall
terminate and be of no further force and effect, and the Triggered Refusal Space
shall no longer be a part of the Potential Expansion Space.
3. POTENTIAL EXPANSION SPACE. The term "POTENTIAL EXPANSION SPACE" means all
portions of the 5th floor of the Building which, at the point in time in
question, are either not leased or are leased to tenants under a lease which
gives Landlord the right to relocate the tenant. If Tenant elects to exercise
its Expansion Option for all or a portion of the Potential Expansion Space, then
Tenant must first exercise the Expansion Option as all portions of the Potential
Expansion Space which are not subject to an existing lease before Tenant may
exercise the Expansion Option as portions of the Potential Expansion Space which
are subject to existing leases which grant Landlord the right to relocate the
tenant. In addition, Tenant may not exercise the Expansion Option or Right of
First Refusal for any portion of the Expansion Space which would in Landlord's
reasonable opinion cause the remaining unleased portion of the 4th floor to be
unleaseable to a potential new tenant.
4. CONDITIONS TO EXERCISE; EXPANSION PERIOD. Tenant may exercise its
Expansion Option or Right of First Refusal only during the Expansion Period and
only if this Lease is then in full force and effect and no event of default (as
defined in Section 25 of this Lease) exists and no event has occurred or
condition exists which, with the giving of notice, the passage of time, or both,
would result in an event of default. The term "Expansion Period" means any time
during the term of this Lease except for the last twelve (12) months of the
initial term (if the option to renew has not been exercised) or any renewal
term. If Tenant exercises its Expansion Option or Right of First Refusal, that
action can not be revoked. Notwithstanding anything to the contrary contained
herein, Tenant's Expansion Option and Right of First Refusal are both subject to
a determination by Landlord, in Landlord's sole discretion, that Tenant's
financial condition at the time it makes such election is comparable or better
than the financial condition of Tenant at the time Tenant had executed the
Lease.
5. ACCEPTANCE BY TENANT. Upon the exercise by Tenant of its Expansion Option
or Right of First Refusal as provided in this Rider, Landlord and Tenant shall,
within ten (10) business days after Tenant delivers to Landlord notice of its
election, enter into a written amendment modifying and supplementing this Lease
and containing other appropriate terms and provisions relating to the addition
of the applicable portions of the Potential Expansion Space (the "Additional
Space") to the Premises (including specifically any increase, adjustment, or
augmentation of rent as a result of such addition). The annual Base Rental to be
paid under this Lease for the Additional Space so leased shall be at the
Prevailing Building Rental Rate, which shall mean the annual rental rate then
being charged by Landlord in the Building for space comparable to the Additional
Space, as determined by Landlord, taking into consideration use, location and
floor level within the Building, rental concessions then being granted by
Landlord under similar circumstances, base year and/or expense stop
calculations, the date the particular rate under consideration is to become
effective, and the remaining term of this Lease. The payment of the new Base
Rental for the Additional Space shall commence on the Effective Date, which
shall be the later of (a) the expiration date of the term of any lease with
another tenant covering the Additional Space, or (b) the date agreed upon by
Landlord and Tenant if the Additional Space is not covered by a prior tenant
lease, or, in the event they are unable to agree, shall be the date thirty (30)
days from the date upon which Tenant notified Landlord of its election to lease
the Additional Space. Rent for a partial month shall be prorated. Possession of
the Additional Space shall be delivered to Tenant in an "as is" condition.
Landlord shall not be liable for
Initialed: Landlord Tenant Rider No. 103 - Page 1
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<PAGE> 23
the failure to give possession of the Additional Space on the Effective Date by
reason of the holding over or retention of possession of any tenant, tenants, or
occupants, or for any other reason, and any such failure shall not impair the
validity of this Lease, or extend the Term, but the rent for such Additional
Space shall be abated until possession is delivered to Tenant, and such
abatement shall constitute full settlement of all claims that Tenant might
otherwise have against Landlord by reason of such failure to give possession of
the Additional Space to Tenant on the effective date.
6. TERMINATION OF OPTION AND RIGHT. Any termination of this Lease during the
original Lease Term (or any extension thereof) or any permitted assignment or
subleasing by Tenant pursuant to this Lease shall terminate the Expansion Option
and Right of First Refusal of Tenant contained in this Rider.
Initialed: Landlord Tenant Rider No. 103 - Page 2
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<PAGE> 24
RIDER NO. 105
SCHEDULE OF BASE RENTAL
Base Rental shall be payable as follows:
<TABLE>
<CAPTION>
Cost Per
Rentable Square
Months Foot Per Annum Monthly Installments
------ -------------- --------------------
<S> <C> <C> <C>
1 through 120 $11.00 $9,198.75
</TABLE>
Initialed: Landlord Tenant Rider No. 105 - Page 1
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<PAGE> 25
RIDER NO. 106
LEASE TERMINATION OPTION
1. OPTION TO TERMINATE. Subject to the terms and conditions set out below,
Tenant has an option to terminate this Lease (the "Termination Option")
effective as of the end of the sixtieth (60th) full calendar month of the Lease
Term (the "Early Termination Date"). Tenant may exercise the Termination only if
(a) no default exists under the Lease, and no event has occurred or condition
exists which would become a default with the giving of notice or the passage of
time, or both;(b) at least one hundred eighty (180) days prior to the Early
Termination Date, Tenant delivers to Landlord (i) a written notice that Tenant
is irrevocably exercising its Termination Option (the "Termination Notice"),
(ii) a certified or cashier's check in an amount equal to the Termination Fee
(defined below); and (iii) the Lease Termination Agreement (defined below).
Tenant may not exercise the Termination Option unless all of the above
conditions are satisfied in full. Tenant's failure to properly or timely
exercise the Termination Option shall result in the waiver of the Termination
Option. If Tenant exercises the Termination Option, then after the Early
Termination Date it will have (i) no further claim for possession, use or
operation of the Premises and (ii) no further rights, titles or interests
therein of any nature whatsoever. Tenant agrees that any and all property
remaining in the Premises after Early Termination Date shall be the sole
property of Landlord and Tenant does hereby assign, transfer, set over and
deliver to Landlord all of Tenant's right, title and interest in and to any and
all leasehold improvements in the Premises and any other property remaining in
the Premises.
2. TERMINATION FEE. The "Termination Fee" payable by Tenant to exercise the
Termination Option shall be equal to fifty percent (50%) of the total of (i) all
amounts incurred by Landlord in completing Landlord's Work or other improvements
to the Premises (including without limitation construction costs, permit fees
and architectural and design fees), (ii) all other concessions or tenant
inducements in connection with the Lease; and (iii) brokerage commissions and
fees and expenses paid to attorneys incurred by Landlord in connection with this
Lease.
3. LEASE TERMINATION AGREEMENT. In order to exercise the Termination Option,
Tenant shall execute and deliver to Landlord multiple counterparts of a written
agreement (the "Lease Termination Agreement") in the form acceptable to Landlord
which includes:
(a) Tenant's acknowledgement, confirmation and agreement that (i) the
Lease and all rights and privileges of Tenant thereunder (including, without
limitation, all rights, titles and interest, if any, of Tenant to possess, use
and/or operate the Premises, and improvements to the Premises) are terminated as
of the Early Termination Date; (ii) Tenant has no further claim for possession,
use or operation of the Premises and no further rights, titles or interests
therein of any nature whatsoever.
(b) Tenant's unconditional and irrevocable waiver, release, and
relinquishment of Landlord from any and all obligations, claims, suits,
liabilities, damages, losses, costs, expenses and causes of action whatsoever,
whether past, present or future, attributable to, arising or accruing from,
under or in connection with the Lease, or any acts or omissions of Landlord, any
predecessor-in-interest to Landlord and any and all agents, servants or
employees of Landlord, in any way pertaining to the Lease (the "Released
Claims"). The Released Claims include any obligations, claims, suits,
liabilities, losses, costs, expenses and causes of action in the nature of or
founded upon breach of the Lease, trespass, business interference (tortious or
otherwise), constructive eviction, non-compliance with any applicable statutory
provisions, fraud, deception, negligence and/or conversion.
Initialed: Landlord Tenant Rider No. 105 - Page 1
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<PAGE> 26
RIDER NO. 107
ANTENNA AND GENERATOR LICENSE
1. Grant of License. During the Lease Term, and subject to the terms of this
Rider and the other provisions of the Lease, Landlord grants to Tenant a
non-exclusive license (the "License") to:
(a) utilize a portion of the roof of the Building (the "Roof Area") [or,
if Landlord and Tenant determine that location on the roof is impractical, an
area immediately outside the Building acceptable to Landlord and Tenant (the
"Alternate Area")] for the purpose of installing, utilizing, maintaining,
repairing, replacing and removing a satellite dish and a generator (the
"Additional Equipment");
(b) utilize portions of the Building's Service Areas (defined below) for
the purpose of installing, utilizing, maintaining, repairing, replacing and
removing Tenant's cables, wires, and other similar equipment so that those
cables, wires and similar equipment may run from the street adjacent to the
Building, through the Service Areas, and connecting with and serving Tenant's
telephone communication and data transmission systems located in the Premises or
on the Roof Area or Alternate Area.
For purposes of this Rider, the term "Roof Area" means a portion of the
roof of the Building (being approximately ___ by ____ feet in size) which is not
utilized by a third party and located at a position which is mutually agreeable
to Landlord and Tenant; and the term "Service Area" means both (a) those
portions of the Building (including, without limitation, the telephone closets
located on the sixth (6th) floor of the Building) which are neither areas open
to the general public or leased or held for lease to tenants, and which are
intended to be utilized for locating utility and communications cables, wires
and similar equipment, and (b) areas of the land outside the Building which are
covered by easement agreements for providing utilities, cable, telephone and
communication services.
2. Limits on Use of License. Tenant may utilize the License for the purposes
stated above only in connection with Tenant's use of the Premises and only in
strict conformance with all applicable federal, state and local laws,
regulations and ordinances. Tenant may not utilize portions of the Services
Areas in a manner which would prevent Landlord or another tenant from being able
to also utilize the Service Areas.
3. Use at Tenant's Risk. Tenant's use of the Roof Area, Alternate Area (if
applicable) and Services Areas shall be at its sole cost and expense and at its
sole risk. Landlord makes no representation or warranty of any kind, either
express or implied, regarding the Roof Area, the Alternate Area or the Services
Areas. Without limiting the prior sentence, Landlord makes no representation or
warranty regarding the condition, suitability, fitness for purpose, workmanship
or quality of the Roof Area, the Alternate Area or Service Areas. Tenant's use
of the License shall not unreasonably interfere with the use of those areas or
any other portion of the Building by Landlord or any other tenant.
4. Installation, Maintenance and Removal. Tenant shall at its sole expense
obtain all permits and pay for all costs associated with the installation,
utilization, maintenance, repair, replacement and removal of the Additional
Equipment and cables, wires and other equipment in the Service Areas.
Installation of any item on the roof of the Building or parking areas shall be
done strictly in conformance with all terms and conditions of any bond or
warranty of Landlord relating to the roof or parking areas (including, without
limitation, any requirement that a particular roofing company or other
contractor be utilized). Tenant shall cause all work on the roof to be performed
in a manner which does not invalidate or impair any bond or warranty of Landlord
relating to the roof or parking areas. In utilizing the Service Areas and
installing any cables, wires or other equipment, Tenant shall not allow any
holes to be drilled into, or other damage caused to, any fire walls in the
Building. Tenant shall indemnify, defend and hold Landlord harmless for any
loss, cost, expense, claim or liability of any nature related to any work on the
roof, use of or installations within a Service Area, or any other use by Tenant
of the License. On or before the expiration or termination of the Lease Term,
Tenant shall remove all Additional Equipment and related cables, wires and other
equipment and restore the roof of the Building, all Alternate Areas (if
applicable) and all Service Areas to their pre-existing condition. If an
Alternate Area is designated, then Tenant shall construct and maintain a solid
screened fence with a locking gate or other barrier reasonably required to limit
access to the Alternate Area and to screen any Additional Equipment from view.
The obligations of Tenant under this Rider shall expressly survive the
expiration of the Lease Term or termination of the Lease.
Initialed: Landlord Tenant Rider No. 106 - Page 1
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<PAGE> 1
EXHIBIT 10.8
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated February 27, 1992 by and among
INTELLIGENT INFORMATION INCORPORATED, a Delaware corporation with offices at
1315 Washington Blvd., Stamford, Connecticut 06902 (the "Purchaser"), and
MICHAEL J. PRYSLAK ("Pryslak") and DENNIS M. ROLAND ("Roland", and together with
Pryslak, the "Sellers").
WHEREAS, each of the Sellers owns fifty (50) shares (the "Shares")
of the Common Stock, no par value (the "Common Stock"), of Quotes, Plus ...,
Inc., a Colorado corporation (the "Company"), which Shares constitute all of the
issued and outstanding capital stock of the Company; and
WHEREAS, the Sellers desire to sell to the Purchaser, and the
Purchaser desires to purchase from the Sellers, the Shares for the Purchase
Price (as hereinafter defined) and upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants and provisions herein contained, the parties hereto hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Sale of the Shares. Upon the terms and subject to the
conditions of this Agreement, the Sellers hereby sell, transfer and assign to
the Purchaser the Shares and deliver to the Purchaser certificates representing
the Shares, duly endorsed in blank, against receipt of payment of the Purchase
Price therefor as provided in Section 1.2 hereof.
Section 1.2 Purchase of Shares; Payment.
(a) Upon the terms and subject to the conditions of this Agreement,
the Purchaser hereby purchases, acquires and accepts the Shares and, in
consideration therefore, in addition to amounts already paid to Sellers by
Purchaser, Purchaser shall pay to Sellers on a monthly basis an amount equal to
two and a half percent (2.5%) of Purchaser's gross revenues (as determined in
accordance with generally accepted accounting principles) (the "Purchase Price
Payment"), provided, however, that the Purchase Price Payment shall, in no event
be less than three thousand dollars ($3,000) per month.
(b) Notwithstanding the provisions of Section 1.2(a) hereof, the
sum of all Purchase Price Payments to Sellers commencing on
<PAGE> 2
the date hereof, in the aggregate, shall be capped at specified amounts as
follows:
(i) If, at any time commencing on the date hereof and ending
on December 31, 2002, the sum total of all Purchase Price Payments to Sellers,
in the aggregate, by Purchaser equals or exceeds $6,000,000 (the "Purchase
Price Payment Cap"), then Purchaser shall have no further obligation to make
additional Purchase Price Payments;
(ii) If, by December 31, 2002, the sum total of all Purchase
Price Payments to Sellers, in the aggregate, by Purchaser is less than
$6,000,000 and Purchaser does not pay Sellers such additional amounts as are
necessary to make up the difference between the aggregate Purchase Price
Payments and the Purchase Price Payment Cap, then for the period commencing
January 1, 2003 and ending December 31, 2003 (as set forth in Sections
1.2(b)(i) above), the Purchase Price Payment Cap shall be adjusted
to $7,000,000;
(iii) If, by December 31, 2003, the sum total of all Purchase
Price Payments to Seller by Purchaser is less than the Purchase price payment
cap (as set forth in Sections 1.2(b)(i) and (ii) above) and Purchaser does not
pay Sellers such additional amounts as are necessary to make up the difference
between the aggregate Purchase Price Payments and the Purchase Price Payment
Cap, then the Purchase Price Payment Cap shall be further adjusted to
$8,000,000 for all times thereafter.
(c) Except as provided in Article VI hereof, amounts payable
pursuant to this Section 1.2 shall be paid by the Purchaser within fifteen (15)
days after the end of each calendar month. Each payment made by the Purchaser
hereunder shall be accompanied by a statement, signed by the Purchaser, setting
forth in reasonable detail the calculation thereof. Sellers or their agents
shall have the right to review records and check computers during reasonable
hours and for reasonable times. Purchaser agrees have its accountants provide
each year, within a reasonable time, certified copies of its regular annual
audits to each Seller until the year following the time when the Purchaser
shall have no further obligation to make additional Purchase Price Payments.
- 2 -
<PAGE> 3
Section 1.3 Closing Date. The closing (the "Closing") of the
transactions contemplated hereby was held at the offices of Brown Raysman &
Millstein, 120 West 45th Street, New York, New York, at 10:00 A.M., New York
City time, on the date hereof. The time and date of the Closing is referred to
herein as the "Closing Date". At the Closing, in addition to the sale and
transfer of the Shares, there was delivered by the parties hereto such
certificates, opinions and other documents as are specified in Article IV
hereof.
Section 1.4 Transfer Taxes. Each of the Sellers shall be responsible
for all transfer and similar taxes assessed or payable in connection with the
sale and transfer of the Shares and the transactions contemplated herein.
ARTICLE II
REPRESENTATIONS AND
WARRANTIES OF THE SELLERS
The Sellers hereby jointly and severally represent and warrant to,
and agree with, the Purchaser as follows:
Section 2.1 Standing.
(a) Except as set forth in Schedule 2.1 hereto, the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado. The Company has the corporate power to own or lease
its properties (such properties being hereinafter referred to as "Property") and
assets and to carry on its business as now conducted. The Company is duly
qualified, admitted or otherwise authorized to transact business, and is in good
standing, as a foreign corporation in the state of Florida, and such
jurisdiction constitutes the only jurisdiction in which the conduct or nature of
the Company's business or the ownership or leasing of its properties or assets
requires it to be so qualified, admitted or otherwise authorized. The copies of
the Certificate of Incorporation, By-Laws, stock transfer records and minute
books of the Company previously delivered or exhibited to the Purchaser
constitute true, correct and complete copies of such documents and reflect all
amendments of the Company's Certificate of Incorporation and By-Laws and minutes
of all actions taken by the stockholders and directors of the Company held
through and including the date of this Agreement. The Company does not own any
shares of, or control, directly or indirectly, or have any equity interest in,
any
- 3 -
<PAGE> 4
corporation, partnership, joint venture, association or other business
organization.
Section 2.2 Capitalization; Options or Other Rights.
(a) The Company has authorized capital stock consisting of one
thousand (1,000) shares of Common Stock, no par value, of which one hundred
(100) Shares are issued and outstanding as of the date hereof. All of such
issued and outstanding Shares have been duly authorized and validly issued, are
fully paid and nonassessable and have not been issued in violation of any
preemptive rights. There are no commitments, plans or arrangements to issue or
sell, and no outstanding options, warrants, convertible securities or other
rights calling for the issuance of, additional shares of authorized but
unissued, unauthorized or treasury shares of the capital stock or other equity
securities of the Company.
(b) Each of the Sellers is the record and beneficial owner of fifty
(50) Shares of the Company, free and clear of any Lien. None of such Shares is
the subject of any voting trust agreement or other agreement relating to the
voting thereof or restricting in any way the sale or transfer thereof. Each of
the Sellers has full right and authority to transfer such Shares pursuant to the
terms of this Agreement.
Section 2.3 Authorization; Contravention; Consents and Approvals.
(a) Each of the Sellers is of full age and has the legal capacity to
enter into this Agreement and to carry out the transactions contemplated hereby,
and this Agreement constitutes the valid and binding obligation of each of the
Sellers enforceable in accordance with its terms.
(b) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not, with respect
to the Company or either of the Sellers, as the case may be, result in a breach
in the terms or conditions of, or constitute a default under, or violate, or
require, as the case may be: (1) any provision of any law, regulation or
ordinance, (2) the Certificate of Incorporation or By-Laws of the Company, (3)
any agreement, lease, mortgage or other instrument or undertaking, oral or
written, to which the Company or either of the Sellers is a party or by which
any of them or any of their properties or assets is or may be bound or affected,
(4) any judgment, order, writ, injunction or decree of any court, administrative
agency or governmental body or (5) any action of or by, or filing with, any
governmental body, agency or official.
- 4 -
<PAGE> 5
(c) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, require any
action, consent or approval of any person, entity or governmental body.
Section 2.4 Property and Assets. The Company has good, valid and
marketable title to, or valid and enforceable leasehold interests in, all of its
properties and assets, in all cases subject to no liens, claims, restrictions,
options or other agreements or rights to purchase or sell, charges, security
interests or other encumbrances of any kind (such rights being hereinafter
referred to as "Liens") or other defects in title of any nature whatsoever, and
all of such properties and assets are set forth on Schedule 2.4 hereto.
Section 2.5 Undisclosed Liabilities. Except as set forth in Schedule
2.5 hereto, the Company does not have any direct or indirect liability,
indebtedness, claim, loss, damage, deficiency, obligation or responsibility,
fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, known or unknown, contingent or otherwise (such
liabilities being hereinafter referred to as "Liabilities") and whether due or
to become due, or arising out of transactions entered into, or any state of
facts existing, on or prior the date hereof.
Section 2.6 Tax Matters. The Sellers have elected, in compliance
with all applicable legal requirements to be taxed under Subchapter S of the
Internal Revenue Code of 1986, as amended (the "Code"), and the corresponding
provisions under any applicable state or local laws, and such elections are in
effect for the Company. The Company does not have any liability, absolute or
contingent, for the payment of any income taxes under the Code or under the laws
of such states or localities which afford tax treatment similar to that under
Subchapter S. For all periods since its inception, the Company has filed and
will file within the time prescribed by law (including extensions of time
approved by the appropriate taxing authorities) all tax and information returns
and reports required to be filed under applicable law and all such returns and
reports are accurate and complete, including without limitation, all matters
concerning withholding on amounts payable to employees as compensation. The
Company has paid, or has made adequate provision for, the payment of all taxes
and levies of every kind, character and description relating to the Company
(including interest and penalties thereon) (collectively "Taxes") which have
become due on or before the date hereof. Neither the Sellers nor the Company
have taken any action which would jeopardize the eligibility of the Company to
be taxed pursuant to the provisions of Subchapter S under the Code or under any
comparable state or local law. The Company has not been the subject of any
audit, examination or adjustment of any Taxes and, to the knowledge of the
Sellers, there are no
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<PAGE> 6
audits pending or threatened. There are no liens for Taxes imposed or threatened
by any Federal, state, local or foreign authority outstanding against the
Company or any of its properties or assets except for liens for current taxes
not yet due and payable. There is not now in force any extension of time with
respect to the date on which any tax return was or is due to be filed by or with
respect to the Company, or any waiver or agreement by the Company, for the
extension of time for the assessment of any Taxes.
Section 2.7 Proprietary Property.
(a) Schedule 2.7 hereto sets forth a complete list of (i) all
computer programs, including the related documentation and specifications, owned
or used by the Company or Pryslak in connection with the Company's business,
(ii) all inventions which are the subject of issued United States or foreign
letters patent or applications therefor or with respect to which ownership is
otherwise claimed, all trade names and trade and service marks used by the
Company, including those for which an application for registration is pending,
and all writings for which copyright is claimed, has been recorded or is
pending, in each case which are used or held for use by the Company, (iii) all
license or other agreements pursuant to which the Company is obligated to pay or
entitled to receive royalties or other fees in connection with the sale,
development or licensing of the above and (iv) all other agreements relating to
know-how, including, without limitation, technology, technical knowledge, source
code, object code, proprietary rights, patented or unpatented inventions, trade
secrets, analytical methodology, processes, data and all other information or
experience possessed by the Company, the Sellers or any of their respective
affiliates, or which the Company, the Sellers or any of their respective
affiliates has the right to use or which the Company, the Sellers or their
respective affiliates is licensed or authorized to use by others or licenses or
authorizes others to use ("Know-how", and together with all of the foregoing,
the "Proprietary Property"). Except as set forth in Schedule 2.7, the Company is
the sole and exclusive holder of all patents, copyrights and trade name and
trademark registrations and is the sole and exclusive owner of, with all right,
title and interest in and to (in each case, free and clear of any Liens
excluding any license agreement set forth in Schedule 2.7), the Proprietary
Property and Know-how set forth in Schedule 2.7 and has sole and exclusive
rights (without being contractually obligated to pay any compensation to any
third party in respect thereof) to the use thereof or the material covered
thereby in connection with the services or products in respect of which they are
being used, and no consent of third parties is required for the use thereof by
the Company or the Purchaser upon completion of the transactions contemplated
hereby.
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<PAGE> 7
(b) Except as set forth in Schedule 2.7, no claims have been
asserted by any person to the ownership or use of any Proprietary property or
Know-how or challenging or questioning the validity or effectiveness of any such
license or agreement, and the Sellers do not know of any reason that could
result in any such claim and, except as set forth herein, the use of the
Proprietary Property and the Know-how by the Company and the disclosure and
delivery of the Proprietary Property and the Know-how to the Purchaser do not
infringe on the rights of any person nor is there any pending, or, to the
knowledge of the Sellers, threatened, claim or allegation that the Company is
engaged in such infringement. All of the patent, copyright, trademark and trade
name registrations listed or required to be listed in Schedule 2.7 are in full
force and effect. No other person has any right to use any patent, copyright,
trademark or trade name listed or required to be listed in Schedule 2.7 for
similar or related products in competition with any Proprietary Property, and to
the best of the knowledge of the Sellers, no other person is infringing any of
the Proprietary Property or Know-how.
(c) The computer programs included within the Proprietary Property
and offered or being developed by the Company are, or shall be, free from any
defects which would in any way have a material adverse effect on the functioning
of such software in accordance with the specifications therefor and contain, or
shall contain, all current revisions of such computer programs, including all
specifications, documentation and other Know-how related thereto. See Schedule
2.7 for further specifications and known limitations.
Section 2.8 Litigation. There is no pending or, to the knowledge of
the Sellers, threatened, legal, administrative, arbitration or other proceeding
or governmental investigation which could affect the Company or the Sellers or
the transactions contemplated hereby, and the Sellers do not know of any reason
that could result in any such proceeding or investigation. Neither the Company
nor either of the Sellers is subject to, and there is not outstanding, any
judgment, award, order, writ, injunction or decree of any court, administrative
agency, governmental body or arbitration tribunal relating to the Company or the
Sellers.
Section 2.9 Compliance with Applicable Laws. The Company is not in
violation or breach of any, and the business and operations of the Company
comply in all material respects and are being conducted in accordance with all,
governing laws, regulations and ordinances applicable thereto, federal, state,
local or foreign, and the Company is not in violation of or in default under,
any judgment, award, order, writ, injunction or decree of any court,
administrative agency, governmental body or arbitration tribunal.
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<PAGE> 8
Section 2.10 Employee Compensation; Labor Matters.
(a) The Company does not have any outstanding liability for payment
of wages, commissions, vacation pay (whether accrued or otherwise), salaries,
fees, bonuses, reimbursable employee business expenses, pensions, contributions
under any employee benefit plans or any other compensation or perquisites,
current or deferred, under any labor, employment or consulting contracts,
whether oral or written, based upon or accruing with respect to those services
of the employees of the Company performed prior to the Closing Date.
(b) There are no employment, severance, termination, consulting,
bonus, profit sharing, percentage compensation, deferred compensation, stock
purchase or stock option plans, collective bargaining or other compensation
plans, agreements, commitments or arrangements maintained by the Company with
any present or former directors, officers or employees thereof or any of their
affiliates. The Company maintains no "employee pension benefit plan" or
"employee benefit plan" as such terms are defined in Sections 3(2) and 3(3) of
the Employee Retirement Income Security Act of 1974, as amended.
Section 2.11 Agreements and Other Rights. Schedule 2.11 hereto lists
all agreements, commitments or arrangements, whether written or oral to which
the Company is a party (the "Contracts"), copies of which have previously been
delivered to the Purchaser. The Contracts have been duly authorized and
delivered by the Company, are in full force and effect and constitute the valid
and binding obligations of the Company enforceable in accordance with their
respective terms. As to the Contracts, (1) there are no existing breaches or
defaults by any party thereunder, (2) no event, act or omission has occurred or,
as a result of the consummation of the transactions contemplated hereby, will
occur which (with or without notice, lapse of time or the happening or
occurrence of any other event) would result in a default thereunder or give
cause for termination thereof, (3) none of them will result in any material loss
to the Company upon completion or performance thereof and (4), to the knowledge
of the Sellers, none of the parties to such Contracts intends to cancel,
renegotiate or exercise or not exercise any option under any such Contract. See
notations on Schedule 2.11 for exceptions to the foregoing representations.
Section 2.12 Entire Business; Competing Activities.
(a) No portion of the business of the Company is conducted by the
Sellers (except in their capacities as officers and/or directors of the Company)
or any affiliate thereof and all of the assets and properties necessary for the
conduct of the business of the Company as presently conducted are exclusively
owned or leased by the Company and used by the Company and its
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<PAGE> 9
customers and not by the Sellers or any of their affiliates. Schedule 2.12 sets
forth all agreements, commitments or arrangements between the Company, on the
one hand, and the Sellers or any of their affiliates, on the other hand, and all
agreements, commitments or arrangements by and among the Sellers relating to the
Company (the "Related Party Agreements").
(b) Neither the Sellers nor any of their respective affiliates has
any direct or indirect interest, either by way of stock ownership or otherwise,
in any firm, corporation, association or business enterprise which competes with
the Company or is a supplier, client, customer or agent of, or is otherwise
engaged in the business engaged in by, the Company.
Section 2.13 Copies of Documents. The Sellers have delivered to
Purchaser true and correct copies of all documents listed on the Schedules
hereto.
Section 2.14 Finders' Fee. There is no investment banker, broker,
finder or other intermediary which has been retained by, or is authorized to act
on behalf of, the Sellers who might be entitled to any fee or commission from
the Purchaser, any of its affiliates or the Company upon the consummation of the
transactions contemplated by this Agreement.
Section 2.15 Accuracy of Representations, Etc. The representations
and warranties made in this Agreement, and in any statement, certificate,
exhibit, schedule or other document furnished or made available by the Sellers
to the purchaser pursuant to this Agreement or in connection with the
transactions contemplated hereby, do not contain any statement which is false or
misleading with respect to any material fact and do not omit to state a material
fact required to be stated herein or therein or necessary in order to make the
statements contained herein or therein not materially false or misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser hereby represents and warrants to the Sellers as
follows:
Section 3.1 Corporate Standing. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to own or lease its properties and assets
and to carry on its business as now being conducted.
Section 3.2 Authorization, Etc. The Purchaser has full corporate
power and authority to execute and deliver this
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<PAGE> 10
Agreement and to carry out the transactions contemplated hereby. The Board of
Directors of the Purchaser has duly authorized the execution and delivery of
this Agreement and the transactions contemplated hereby, and no other corporate
proceedings on the part of the Purchaser is necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement constitutes
the valid and binding obligation of the Purchaser, enforceable in accordance
with its terms. No further action, consent or approval of any person, entity or
governmental body is required by the Purchaser for the execution and delivery
of, this Agreement or the consummation of the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in a breach of the terms or
conditions of, or constitute a default under, or violate, as the case may be,
(1) any provision of any law, regulation or ordinance, (2) the Certificate of
Incorporation or By-Laws of the Purchaser, (3) any agreement, lease, mortgage or
other instrument or undertaking, oral or written, to which the Purchaser is a
party or by which it or any of its properties or assets is or may be bound or
affected, or (4) any judgment, order, writ, injunction or decree of any court,
administrative agency or governmental body.
Section 3.3 Purchase for Investment. The Purchaser is acquiring the
Shares for investment and not with a view to the sale or distribution thereof in
violation of the Securities Act of 1933, as amended.
Section 3.4 Finders' Fee. There is no investment banker, broker,
finder or other intermediary which has been retained by, or is authorized to act
on behalf of, the Purchaser or any of its affiliates who might be entitled to
any fee or commission from the Sellers or any of their affiliates upon
consummation of the transactions contemplated by this Agreement.
Section 3.5 Accuracy of Representations. The representations and
warranties made by the Purchaser in this Agreement, and in any statement,
certificate, exhibit, schedule or other document furnished or made available by
the Purchaser to the Sellers pursuant to this Agreement or in connection with
the transactions contemplated hereby, do not contain any statement which is
false or misleading with respect to any material fact and do not omit to state a
material fact required to be stated herein or therein or necessary in order to
make the statements contained herein or therein not materially false or
misleading.
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<PAGE> 11
ARTICLE IV
CLOSING DELIVERABLES
At the Closing, the following actions took place:
Section 4.1 Authority. The Purchaser and the Sellers, as the case
may bet, received all documents it or they may have reasonably requested
relating to the authority of each of the Sellers and the Purchaser to enter into
this Agreement and to consummate the transactions contemplated hereby.
Section 4.2 Opinion of the Company's and Sellers' Counsel. The
Sellers delivered to the Purchaser the opinion of Russo & Baker, P.A., counsel
to the Company and the Sellers, as to certain matters covered by Article II
hereof in the form of Exhibit A hereto.
Section 4.3 Resignations. The Purchaser received the resignations of
all directors and officers of the Company effective as of the Closing Date.
Section 4.4 Employment Agreements. The Purchaser and each of the
Sellers entered into Employment Agreements in the form of Exhibits B-1 and B-2
hereto.
Section 4.5 Releases. The Purchaser received releases from each of
the Sellers from all claims which the Sellers may have against the Company in
the form of Exhibit C hereto.
Section 4.6 Consents. The Purchaser and the Sellers, as the case may
be, were furnished with appropriate evidence of the granting of all approvals,
authorizations and consents required to consummate the transactions contemplated
hereby.
Section 4.7 Opinion of Purchaser's Counsel. The Purchaser delivered
to the Sellers the opinion of Brown Raysman & Millstein, counsel to the
Purchaser, as to certain matters covered by Article III hereof in the form of
Exhibit D hereto.
Section 4.8 Assignment of Trademark. The Sellers and the Company
assigned to the Purchaser all of their right, title and interest in and to
certain property used by the Company pursuant to an Assignment in the form of
Exhibit E hereto.
ARTICLE V
NATURE AND SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
All statements contained herein or in any certificate, schedule or
other document delivered pursuant hereto shall be
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<PAGE> 12
deemed representations and warranties by the person delivering the same. All
representations and warranties shall survive the Closing and shall not be
affected by any investigation at any time made by or on behalf of the Purchaser,
on the one hand, or the Sellers, on the other hand.
ARTICLE VI
INDEMNIFICATION
(a) The Sellers hereby agree to indemnify and hold harmless the
Purchaser, its affiliates and the Company from and against any liabilities or
obligations, damages, losses, claims, encumbrances, costs or expenses (including
attorneys' fees) of any nature, whether absolute, contingent or otherwise (any
or all of the foregoing herein referred to as "Loss") insofar as a Loss (or
actions in respect thereof) whether existing or accruing prior or subsequent to
the Closing Date arises out of or is based upon any misrepresentation (or
alleged misrepresentation) or breach (or alleged breach) of any of the
warranties, covenants or agreements made by the Sellers or any of them in this
Agreement or in any statement, certificate, schedule, exhibit or other document
made or delivered pursuant hereto to the Purchaser by or on behalf of the
Sellers or any of them.
(b) The Purchaser hereby agrees to indemnify and hold harmless the
Sellers and their respective affiliates from and against Loss insofar as such
Loss (or actions in respect thereof) whether existing or accruing prior or
subsequent to the Closing Date arises out of or is based upon any
misrepresentation (or alleged misrepresentation) or breach (or alleged breach)
of any of the warranties, covenants or agreements made by the Purchaser in this
Agreement or in any statement, certificate, schedule, exhibit or other document
made or delivered pursuant hereto to the Sellers by or on behalf of the
Purchaser.
(c) No claim for indemnification hereunder shall be valid unless
notice of the matter which may give rise to such claim is given in writing by
the Indemnitees to the persons against whom indemnification is sought (the
"Indemnitors") as soon as reasonably practicable after such Indemnitees become
aware of such claim, provided that the failure to notify the Indemnitors shall
not relieve them from any liability which they may have to the Indemnitees
otherwise than under this Article VI unless the Indemnitors shall be irreparably
prejudiced by such failure. Such notice shall state that the Indemnitors are
required to indemnify the Indemnitees for a Loss and shall specify the amount of
Loss and the relevant details thereof. If, within 60 calendar days of receipt of
such notice, the Indemnitors have not notified the Indemnitees that they object
to such claimed Loss explaining the relevant details of the reasons for
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<PAGE> 13
such objection, then the Indemnitors shall be deemed to have waived any
objections to such claimed Loss.
(d) The Indemnitors shall have the right to settle and to defend,
through counsel reasonably satisfactory to the Indemnitees at the Indemnitors'
expense, any action which may be brought in connection with all indemnifiable
matters subject to this Article VI (a "Third Party Action"). In such event, the
Indemnitees of the Loss in question and any successor thereto shall permit the
Indemnitors access to their books and records to the extent necessary for the
defense of any Third Party Action and otherwise cooperate with the Indemnitors
in connection with such action, provided that the Indemnitees shall have the
right fully to participate in such defense at their own expense. The defense by
Indemnitors of any such action shall not be deemed a waiver by the Indemnitors
of their right to assert a Dispute with respect to the responsibility of the
Indemnitors with respect to the Loss in question. The Indemnitors shall have the
right to settle or compromise any claim against the Indemnitees without the
consent of the Indemnitees provided that the terms thereof provide for the
unconditional release of the Indemnitees and require the payment of monetary
damages only. If the Indemnitors shall fail to take timely action to defend any
such action, the Indemnitees involved shall have the right to assume the defense
thereof with counsel of its choosing, at the Indemnitors' expense, and defend,
settle or otherwise dispose of such action.
(e) Amounts payable to the Purchaser pursuant to the indemnification
provided in section (a) of this Article VI may, at the Purchaser's option, be
set off against the payments to be made by the Purchaser in accordance with
Section 1.2 hereof.
ARTICLE VII
NON-COMPETITION
The Purchaser agrees that it will not develop, directly or
indirectly, any assets having a functionality that is substantially similar to
those assets of the Company that are currently operational or are foreseeable
extensions or enhancements of currently operational programs, unless the
development of such assets will not have any adverse effect on the Purchase
Price Payments. The Purchaser further agrees that, in the event (a) Purchaser
sells or otherwise transfers the System or the controlling shares of the Company
to a third party, (i) the Purchaser will not, for a period of two (2) years
after such sale or transfer, directly or indirectly, engage in the same or
similar programs as are presently produced by the Company or that would be
considered competition for the same customers, and (ii) such third party shall
agree to be bound by all of the terms and conditions of this Agreement or (b)
Purchaser grants a security interest in the System to any third party, Purchaser
shall
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<PAGE> 14
require such third party to agree that its security interest in the System is
subject to the terms and conditions of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
(without giving effect to conflicts of law).
Section 8.2 Headings and Captions. The headings and captions
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
Section 8.3 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute but one and the same instrument.
Section 8.4 Entire Agreement. This Agreement, including all Exhibits
and Schedules, constitutes the entire understanding among the parties with
respect to the subject matter hereof, superseding all negotiations, prior
discussions and preliminary agreements made prior to the date hereof.
Section 8.5 Assignment. This Agreement shall not be assignable by
any party hereto; provided, however, that the Purchaser may assign its rights
hereunder to any entity which acquires all or substantially all of its capital
stock or assets, provided such assignee agrees to be bound by all of the terms
and conditions of this Agreement, and Sellers may assign all of their right,
title and interest in and to the Purchase Price Payment.
Section 8.6 Separability. If any section, subsection or provision of
this Agreement, or the application of such section, subsection or provision, is
held invalid, the remainder of this Agreement and the application of such
section, subsection or provision to persons or circumstances other than those to
which it is held invalid shall not be affected thereby.
Section 8.7 Notices. All notices, consents or other communications
required or permitted to be given by any party hereunder shall be in writing
(including telecopy or similar writing) and shall be given by delivery or by
certified or registered mail, postage prepaid, as follows:
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<PAGE> 15
(a) If to Sellers, to them at:
Mr. Michael J. Pryslak
10850 SW 42nd Street
Miami, Florida 33165
Telecopy: 305-223-5671
Mr. Dennis M. Roland
2020 South Fairplay Street
Aurora, Colorado 80014-4526
Telecopy: 303-369-8791
With a copy to:
Edmund P. Russo, Esq.
Russo & Baker, P.A.
4675 Ponce de Leon Blvd, Suite 301
Coral Gables, Florida 33146
Telecopy: (305) 665-4011
(b) If to Purchaser, to it at:
1315 Washington Blvd.
Stamford, Connecticut 06902
Attn: Mr. Robert M. Unnold
Telecopy: 800-554-9157
With a copy to:
Brown Raysman & Millstein
120 West 45th Street
New York, New York 10036
Attn: Michael Hirschberg, Esq.
Telecopy: (212) 840-2429
or at such other address or telecopy number (or other similar number) as any
party may from time to time specify to the other parties hereto. Any notice,
consent or other communication required or permitted to be given hereunder shall
be deemed to have been given on the date of mailing, personal delivery or
telecopy (provided the appropriate answerback is received) thereof and shall be
conclusively presumed to have been received on the second business day following
the date of mailing or, in the case of personal delivery, the actual day of
personal delivery thereof, or, in the case of telecopy delivery, when such
telecopy is transmitted, except that a change of address shall not be effective
until actually received.
Section 8.8 Costs. Except as provided in Article VI and Section 8.13
hereof, each party will pay its own costs and
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<PAGE> 16
expenses involved in carrying out the transactions contemplated by this
Agreement.
Section 8.9 Waiver. Waiver by any of the parties of any term,
provision or condition of this Agreement shall not be construed to be a waiver
of any other term, provision or condition. Failure or delay by any party to
require performance of any provision of this Agreement will not affect or impair
such party's right to require full performance of such provision at any time
thereafter.
Section 8.10 Exhibits and Schedules. The Exhibits and Schedules are
part of this Agreement as if set forth fully herein.
Section 8.11 Amendment. This Agreement may not be amended except by
an instrument in writing signed by or on behalf of the parties hereto.
Section 8.12 Further Assurances. Subject to the terms and conditions
of this Agreement, each of the parties hereto will use all reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable, under applicable laws and regulations or
otherwise, to fulfill its or his obligations under this Agreement and to
consummate the transaction's contemplated by this Agreement.
Section 8.13 Attorneys' Fees. In the event of any litigation
hereunder, the prevailing party shall be entitled to recover the reasonable
attorneys' fees and other costs incident to such litigation, including appeals,
from the losing party.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
INTELLIGENT INFORMATION INCORPORATED
By: /s/ Robert M. Unnold
----------------------------
Robert M. Unnold
Chief Executive Officer
/s/ Michael J. Pryslak
----------------------------
Michael J. Pryslak
/s/ Dennis M. Roland
----------------------------
Dennis M. Roland
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<PAGE> 17
Schedule 1.2
Allocation of Purchase Price Payments
The Sellers agree that at the date of this Agreement, the Company owes Mr.
Pryslak $47,484.62 and Mr. Roland owes the Company $31,389.20.
The Sellers agree to waive this net liability to the Company and the
Purchaser agrees to allocate the Purchase Price Payments as follows:
Of the first $157,748.00 of Purchase Price Payments, Mr. Pryslak will
receive $0.75 and Mr. Roland will receive $0.25 of each $1.00 due, then
for all additional Purchase Price Payments, Mr. Pryslak will receive $0.50
and Mr. Roland will receive $0.50 of each $1.00 due.
<PAGE> 18
Schedule 2.1
Standing
The Company failed to file a biannual report with the Secretary of State
of Colorado which was due on February 1, 1992 and is now suspended. To
bring the Company back to "good" standing, a corporate report must be
filed with the Secretary of State of Colorado. On February 18, 1992 the
biannual report was mailed with the required $125.00 fee to the Secretary
of State of Colorado. The Sellers shall pay or reimburse the Purchasers
for all costs and expenses incurred in connection with restoring the good
corporate status of the Company.
<PAGE> 19
Schedule 2.4
Property and Assets
Hollywood Federal Bank Account 751475
Balance at time of Closing: $20.00
Blank checks numbered 101 through 112 and __________ through 412.
Novell Btrieve Database Management Software Library
CXL Interface Software Library
Greenleaf Serial Communications Software Library
Microsoft C Compiler Software Version 6.0
Business files and corporate minutes and stock transfer books including
various records and correspondence.
See also Proprietary Property set forth on Schedule 2.7 and Contracts set
forth on Schedule 2.11.
<PAGE> 20
Schedule 2.5
Liabilities
As of November 22, 1991, Mr. Thomas M. Vockrodt, 13900 East Harvard
Avenue, Suite 212, Aurora, Colorado 80014 claimed that Quotes Plus owed
$985.12 for unspecified legal services. The Sellers shall remain liable
for this amount and shall pay or reimburse the Company for all costs and
expenses incurred in connection with the foregoing.
<PAGE> 21
Schedule 2.7
Proprietary Property
Copyrighted Quote Alert Computer Program (Quote Alert Software or QAS). The QAS
was written by Mr. Pryslak in the "C" computer language and is compiled with the
Microsoft C Compiler, Version 6.0. The QAS source code is provided on computer
diskettes along with object code for the following commercial software libraries
which are used by the QAS to perform certain functions:
Novell Btrieve Database Manager
CXL Interface Library
Greenleaf Serial Communications Library
PC Quote DBAX Application Program Interface Software
Intelligent Information Incorporated has been using the Quote Alert software
under a Quote Alert Service Agreement since August 1, 1991. Currently there are
no known defects in the Quote Alert software.
The functions and use of the software are described in the Quote Alert System
User's Guide dated October 1, 1990. While the QAS is intended to provide highly
specialized functions relating to monitoring real-time financial data and
sending such data to radio pagers, there are several known limitations of the
QAS which apply to these specialized functions. These known limitations are:
1. The QAS can only be used with a single user interface. That means only
one person and one computer can be used to operate the system. To upgrade
the system to support simultaneous multiple users the software must be
modified to operate in a multi-user environment and additional equipment
must be added. The Novell Btrieve database management system was selected
for the QAS to more easily develop a multi-user interface on a Novell
Local Area Network.
2. The QAS can only dial out to one paging company computer at one time.
To upgrade the system to support simultaneous calling to multiple paging
company computers will require changing the logic of the out-dialing
portion of the software and the addition of multi-channel equipment in the
system computer.
3. The QAS software is limited in the total number of Watched Items as
bound by conventional computer memory. A Watched Item is either an item
for a Price Alert or an item for a Volume Alert. For example, the stock
IBM is an item. Each time a new item is added to the system, conventional
computer memory is utilized. Adding an additional Price or Volume Alert
for an item already being watched does not require additional
<PAGE> 22
memory, so no additional memory resource is required when a second
customer desires to monitor IBM. This limitation can be upgraded to be
bound by "Expanded" computer memory with software changes and hardware
additions. it is estimated that the QAS can support approximately 1,100
Watched Items before use of Expanded computer memory is necessary.
4. The number of customer records, including the number of customers, the
number of Price Alerts, the number of Timed Quotes and the number of
volume Alerts, is limited only by the disk storage capacity of the system
computer.
5. The QAS can only transfer messages to paging system computers that are
"hard coded" into the computer program. This means that the addition or
modification of the parameters associated with transferring messages to a
paging company computer requires changing the source code of the program
and recompiling the program. This limitation can be removed by changing
the logic of the program to store paging company parameters in disk files
instead of computer program memory.
6. The QAS is limited to accessing real-time financial data provided
through PC Quote's DBAX Application Program Interface, which includes
software, security hardware and monthly service of a continuous stream of
data. To access data from additional sources would require significant
system changes.
7. The QAS requires an uninterrupted power source.
The Sellers represent and warrant that neither the Quote Alert System User's
Guide nor any document provided to or statements made to any person are
inconsistent with the foregoing limitations.
Pending Trademark/Service Mark for the mark "QUOTE ALERT". Mr. Pryslak filed an
application for a trademark for the term "QUOTE ALERT" on October 18, 1990 with
the U.S. Department of Commerce, Patent and Trademark Office, Washington D.C.
20231. The application was assigned Serial Number 74/108661 on October 24, 1990.
Mr. Gerald Seegars is the Examining Trademark Attorney in Law Office 6,
telephone number 703 308-1031. On September 23, 1991 Mr. Seegars filed an
"Examiner's Amendment" to the application to modify the international class the
mark would be registered under. By executing this Stock Purchase Agreement, Mr.
Pryslak assigns his rights to the "QUOTE ALERT" trademark application to the
Purchaser, Intelligent Information Incorporated.
<PAGE> 23
March 20, 1990
Quote Alert System Copyright Form TX
Registration Number TX 2-787-062
<PAGE> 24
Schedule 2.11
Agreements and Other Rights
March 20, 1990
License Agreement between Quotes Plus, Inc. and Page America of New York, Inc.
This Agreement provides Page America with a license to use the Quote Alert
software in the New York and Chicago areas. Page America has never paid Monthly
Per Subscriber Fees (Section 8) or Monthly Maintenance Fees (Section 9). Page
America has provided payment of the Lifetime License Fee (Section 10) and
Installation and Training Costs (Section 11). No notices have been sent to or
received from Page America regarding this Agreement. Contact Mr. Steve Sinn,
201 342-6676.
March 26, 1990
Confidential Information Agreement between Mr. Timothy J. Pusieko and Quotes
Plus, Inc.
Mr. Pusieko was considered for a marketing position. Contact Mr. Timothy J.
Pusieko, 404 978-1254 or 800 800- 3638.
March 26, 1990
Novell, Runtime License Agreement
This Agreement provides Quotes Plus with authority to use Novell software within
its Quote Alert computer programs.
August 13, 1990
Service Facilitator Agreement between PC Quote, Inc. and Quotes Plus, Inc.
This Agreement gives QPI the ability to distribute Market Data through its Quote
Alert software technology. PC Quote has agreements with various stock markets
and financial exchanges to distribute Market Data for various purposes. This
Service Facilitator Agreement provides Quotes Plus authority to further
distribute Market Data through its applications. Included as Exhibit C is a
Joint Marketing Agreement between PC Quote, Inc. and Quotes Plus, Inc. This
Joint Marketing Agreement provides per-subscriber monthly royalties from Quotes
Plus, Inc. to PC Quote, Inc. and per-system monthly royalties from PC Quote,
Inc. to Quotes Plus, Inc. Contact Mr. Jay Keller, 312 786-5400 or 800 225-5657.
<PAGE> 25
August 16, 1990
Copies of sections of agreements between PC Quote, Inc. and the New York Stock
Exchange authorizing a Pilot Test of the Quote Alert service. These documents
describe test of the Quote Alert service using Market Data from the Consolidated
Tape Association exchanges, including the New York Stock Exchange and the
American Stock Exchange. The Pilot Test program is scheduled to end on August 1,
1992. Contact Mr. John F. Cipriano, New York Stock Exchange, 212 656-2052 and
Mr. Charles H. Faurot, American Stock Exchange, 212 306-1340.
August 30, 1990
Non-Disclosure Agreement between Motorola, Inc. and Quotes Plus, Inc. QPI fully
disclosed its business plans and financial information monitoring application to
Motorola. Contact Mr. Jim Page, 407 364-2776.
October 1, 1990
Licensing Agreement between USA Mobile Communications, Inc. and Quotes Plus,
Inc.
USA Mobile used the Quote Alert system for the one year term. USA Mobile is
currently not using the system and has an outstanding balance owed to Quotes
Plus of $1,410.00 as of February 10, 1992. No notices have been sent to or
received from USA Mobile regarding this Agreement. Contact Mr. Stan Sech, 513
489-0122.
December 7, 1990
Copy of letter from NASDAQ Stock Market to PC Quote, Inc. authorizing use of
NASDAQ Market Data on Quote Alert service. Contact Ms. Anne Pittman Durand, 301
590-6526.
March 19, 1991
Non-Written Understanding between SkyTel, NASDAQ Stock Market and Quotes Plus,
Inc.
A service test began in the Spring of 1991 offering officers of NASDAQ-listed
companies SkyTel paging services with Quote Alert service. Originally, NASDAQ
was prepared to buy services from SkyTel and Quotes Plus and provide these
services to NASDAQ-listed companies. No formal agreements exist. Contact Mr.
Chris Ritter, SkyTel, 212 351-2333 or 800 759-6344 and Ms. Barbara Sweeney,
NASDAQ, 202 728-8016.
<PAGE> 26
March 25, 1991
Non-Written Understanding between The National Dispatch Center (NDC) and Quotes
Plus, Inc.
Quotes Plus and NDC have agreed to offer the Quote Alert service under NDC's
name STOCKMASTER for an equal sharing of profits. No written agreements have yet
been proposed and no funds have been exchanged. Quotes Plus has been providing
service to NDC (including service to customers of NDC) on a demonstration basis
since early 1991. Contact Mr. John MacLeod, 619 481-9500 or 800 800-8449.
April 29, 1991
Copy of Agreement between PC Quote, Inc. and the Options Price Reporting
Authority (OPRA).
This Agreement provides authorization for PC Quote to allow Quotes Plus to
distribute OPRA Market Data through the Quote Alert system for a monthly
per-subscriber fee. See the Federal Register, Volume 56, No. 104, May 30, 1991,
Notices, Page 24434, Release No. 34-29214, File No. s7-8-90. Contact Mr. Joseph
P. Corrigan, 312 786-7190.
June 1, 1991
Service Agreement between Forsythe Communications, Inc. and Quotes Plus, Inc.
Forsythe is not using the Quote Alert service.
August 1, 1991
Service Agreement between Intelligent Information Incorporated and Quotes Plus,
Inc.
December 9, 1991
Pending agreement between PC Quote, Inc. and the Toronto Stock Exchange to allow
all Canadian Market Data to be distributed on the Quote Alert service. Contact
Mr. Robert A. Moores, 416 947-4456.
<PAGE> 27
Schedule 2.12
Entire Business; Competing Activities
Schedule of Assets owned by Sellers and used for the Company. The depreciated
value of these Assets were. transferred from the Company's books effective
February 29, 1992 as credit against the net outstanding loan from the Company to
the Sellers. While employed by III, the Sellers will continue to use these
Assets for the benefit of III.
Pryslak's Assets: Value
Furniture 97.19
Folding Table 8.48
Filing Cabinet 16.40
Printer EXP420 37.22
Epson Equity II+ Computer 486.24
Telephones 58.43
Hewlett Packard LaserJet IIP Printer 286.53
MIT 386-25 Computer 1146.56
Answering Machine 34.44
Everex 2400 Baud Modem 76.05
Compaq LTE/286 Model 20 Computer 1349.04
2 GTE Telephones 171.50
Tripp Lite UPS 174.19
Roland's Assets: Value
Furniture 97.19
Target Computer Monitor 22.72
Mr. Pryslak is an Officer and equity partner in The Wright Agency, Inc., a
Florida Corporation that provides telecommunications consulting and sales
services to small businesses. Quotes Plus, Inc. uses long distance telephone
service from Fairfield County Telephone Company and The Wright Agency receives
commissions from Fairfield County Telephone Company for Quotes Plus' use of such
services.
<PAGE> 28
EXHIBIT A
February __, 1992
Intelligent Information Incorporated
1315 Washington Blvd.
Stamford, Connecticut 06902
Re: Stock Purchase Agreement by and among Intelligent Information
Incorporated, Michael J. Pryslak and Dennis M. Roland
Dear Sirs:
We are counsel to Quotes, Plus. . ., Inc., a Colorado corporation
("QPI"), and Michael J. Pryslak and Dennis M. Roland (the "Sellers") in
connection with that certain Stock Purchase Agreement (the "Agreement") dated
February __, 1992 by and among Intelligent Information Incorporated ("III") and
the Sellers, and in connection with the consummation of the transactions
contemplated by the Agreement.
In so acting and as a basis for the opinions expressed below, we
have examined executed copies of the Agreement and the documents delivered in
connection with the Agreement (the "Documents"), certified copies of the
Certificate of Incorporation and By-Laws of QPI, minutes of the meetings of the
Board of Directors and stockholders of QPI and original or photostatic copies of
such other records and other documents as we have deemed relevant and necessary
for the opinions hereinafter set forth. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to original documents of all documents submitted
to us as certified or photostatic copies. As to various questions of fact
material to such opinions, we have relied upon certificates of the Sellers and
officers of QPI and certificates of public officials of the States of Colorado
and Florida.
For purposes of the opinions expressed below, we have assumed that
III has all requisite power and authority and has taken all necessary action to
authorize, execute and deliver the Agreement and to consummate the transactions
contemplated thereby.
<PAGE> 29
Intelligent Information -2- February __, 1992
Incorporated
Terms which are not otherwise defined herein have the respective
meanings ascribed to them in the Agreement.
Based upon and subject to the foregoing, we are of the opinion that:
(1) QPI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado. QPI has the corporate
power to own or lease its properties and assets and to carry on its business as
now conducted. QPI is duly qualified to transact business, and is in good
standing, as a foreign corporation in the State of Florida.
(2) QPI has authorized capital stock consisting of one thousand
(1,000) shares of Common Stock, no par value, of which one hundred (100) Shares
are issued and outstanding as of the date hereof. All of such issued and
outstanding Shares have been duly authorized and validly issued, are fully paid
and nonassessable and have not been issued in violation of any preemptive
rights. There are no commitments, plans or arrangements to issue or sell, and no
outstanding options, warrants, convertible securities or other rights calling
for the issuance of, additional shares of authorized but unissued, unauthorized
or treasury shares of the capital stock or other equity securities of QPI.
(3) Each of the Sellers is the record and beneficial owner of fifty
(50) Shares of QPI, free and clear of any Lien. None of such Shares is the
subject of any voting trust agreement or other agreement relating to the voting
thereof or restricting in any way the sale or transfer thereof. Each of the
Sellers has full right and authority to transfer such Shares pursuant to the
terms of this Agreement.
(4) Each of the Sellers is of full age and has the legal capacity to
execute and deliver the Agreement and the Documents and to carry out the
transactions contemplated thereby. The Agreement and the Documents have been
duly executed and delivered by each of the Sellers and constitute the valid and
binding obligations of each of the Sellers enforceable against the Sellers in
accordance with their respective terms, except to the extent that such
enforcement may be limited by any applicable bankruptcy, reorganization,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally and except as such terms may be limited by the application of such
general principles of equity as a court with proper jurisdiction may apply.
(5) The execution, delivery and performance of the Agreement and the
Documents and the consummation of the transactions contemplated thereby will not
result in a breach in the
<PAGE> 30
Intelligent Information -3- February __, 1992
Incorporated
terms or conditions of, or constitute a default under, or violate, as the case
may be: (a) any provision of any law, regulation or ordinance, (b) the
Certificate of Incorporation or By-Laws of QPI, (c) any agreement, lease,
mortgage or other instrument or undertaking, oral or written, of which we are
aware, to which QPI or either of the Sellers is a party or by which any of them
or any of their respective properties or assets is or may be bound or affected
or (d) any judgment, order, writ, injunction or decree of any court,
administrative agency or governmental body.
(6) The execution and delivery by the Sellers of the Agreement and
the Documents and the consummation of the transactions contemplated thereby
require no further action, consent or approval of any person or entity.
(7) There is no pending or, to the best of our knowledge, threatened
legal, administrative, arbitration or other proceeding or governmental
investigation which could affect QPI or the Sellers or the transactions
contemplated by the Agreement. Neither QPI nor either of the Sellers is subject
to any, and there is no outstanding, judgment, award, order, writ, injunction or
decree of any court, administrative agency, governmental body or arbitration
tribunal relating to QPI or the Sellers.
(8) To the best of our knowledge, QPI is not in violation or breach
of any, and the business and operations of QPI comply in all material respects
and are being conducted in accordance with all, governing laws, regulations and
ordinances applicable thereto, Federal, state, local or foreign, and QPI is not
in violation of or in default under, any judgment, award, order, writ,
injunction or decree of any court, administrative agency, governmental body or
arbitration tribunal.
Very truly yours,
Russo & Baker, P.A.
<PAGE> 31
EXHIBIT B-1
EMPLOYMENT AGREEMENT
AGREEMENT dated this ____ day of February, 1992, by and between
INTELLIGENT INFORMATION INCORPORATED, a Delaware corporation with principal
executive offices at 1315 Washington Blvd., Stamford, Connecticut 06902 ("III"),
and DENNIS H. ROLAND, residing at 2020 South Fairplay Street, Aurora, Colorado
80014-4526 ("Employee").
W I T N E S S E T H :
III is desirous of employing Employee, and Employee is desirous of
being employed by III, all upon the terms and subject to the conditions
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment. III agrees to employ Employee, and Employee agrees to
be employed by III, upon the terms and subject to the conditions of this
Agreement.
2. Term. The employment of Employee by III as provided in Section 1
will be for a period of one (1) year commencing on the date hereof, unless
sooner terminated as hereinafter provided (the "Term"), and shall automatically
renew from year to year thereafter unless either party gives at least sixty (60)
days prior written notice of termination.
3. Duties; Best Efforts. Employee shall be responsible for creating
and improving paging company contracts for equipment and air time in support of
the delivery nationwide of the Quote Alert Service owned by III's wholly-owned
subsidiary Quotes Plus..., Inc. ("QPI") and shall perform such other duties and
responsibilities in reasonable support of the goals of III which may be assigned
to him from time to time by the Chief Executive Officer of III. Employee shall
devote substantially all of his business time, attention and energies to the
business and affairs of III, shall use his best efforts to advance the best
interests of III and shall not during the Term be actively engaged in any other
business activity in any way to the detriment of III, whether or not such
business activity is pursued for gain, profit or other pecuniary advantage.
4. Compensation.
(a) Base Salary. III shall pay to Employee a base salary (the "Base
Salary") at a rate of $42,000 per annum, payable in equal semi-monthly
installments during the Term.
<PAGE> 32
(b) Out-of-Pocket-Expenses. III shall promptly pay to Employee the
reasonable expenses incurred by him in the performance of his duties hereunder,
including, without limitation, those incurred in connection with business
related travel or entertainment, or, if such expenses are paid directly by
Employee, shall promptly reimburse him for such payment, provided that Employee
properly accounts therefor.
(c) Participation in Benefit Plans. Employee shall be entitled to
participate in or receive benefits under any pension plan, profit sharing plan,
health and accident plan or any other employee benefit plan or arrangement made
available by III to its employees, with the minimum being a paid family health
plan.
(d) Vacation. Employee shall be entitled to two (2) weeks paid
vacation days during the Term, prorated in the event Employee is employed
hereunder for less than an entire year in accordance with the number of days in
such year during which he is so employed. Employee shall also be entitled to all
paid holidays given by III to its employees.
(e) Bonus. Employee shall receive a bonus of $4,500 for securing the
extension of the ongoing pilot programs with the New York Stock Exchange, the
American Stock Exchange, the National Association of Securities Dealers, Inc.
and the Options Price Reporting Authority, of which $2,700 has been paid on the
date hereof and $l,800 shall be paid on March 27, 1992. In the event that such
pilot programs are not extended, then the amount of the bonus shall be set off
from the amounts payable to Employee pursuant to Section 1.2 of that certain
Stock Purchase Agreement dated the date hereof by and among III, Employee and
Michael J. Pryslak.
5. Termination. Employee's employment hereunder shall be terminated
upon Employee's death and may be terminated as follows:
(a) In the event that Employee hereafter (i) shall fail to comply
with any of the material terms of this Agreement, (ii) shall fail to perform his
duties hereunder, (iii) shall disregard policy directions from the President or
the Board of Directors of III, (iv) shall engage, in his capacity as an employee
of III, in gross misconduct injurious to III or (v) shall be convicted of a
crime involving moral turpitude.
(b) Upon not less than thirty (30) days' written notice in the event
that (i) Employee shall have become so incapacitated as to be unable to resume
within the ensuing six (6) months his employment hereunder by reason of physical
or mental illness or injury or (ii) Employee shall not have substantially
performed his duties hereunder for three (3) consecutive
-2-
<PAGE> 33
months by reason of any such physical or mental illness or injury.
If Employee disputes any termination pursuant to this Section 5,
either Employee or III may seek to have such dispute adjudicated by arbitration
in accordance with the then existing rules of the American Arbitration
Association.
6. Covenant Regarding Inventions and Copyrights. Employee shall
disclose promptly to III any and all inventions, discoveries, improvements and
patentable or copyrightable works initiated, conceived or made by him, either
alone or in conjunction with others, during the Term and related to the business
or activities of III, and he assigns all of his interest therein to III or its
nominee; whenever requested to do so by III, Employee shall execute any and all
applications, assignments or other instruments which III shall deem necessary to
apply for and obtain letters patent or copyrights of the United States or any
foreign country, or otherwise protect III's interest therein. These obligations
shall continue beyond the conclusion of the Term with respect to inventions,
discoveries, improvements or copyrightable works initiated, conceived or made by
Employee during the Term and shall be binding upon Employee's assigns,
executors, administrators and other legal representatives.
7. Protection of Confidential Information. Employee acknowledges
that he has been and will be provided with information about, and his employment
by III will, throughout the Term, bring him into close contact with, many
confidential affairs of III, including proprietary information about costs,
profits, markets, sales, products, key personnel, pricing policies, operational
methods, technical processes and other business affairs and methods, plans for
future developments and other information not readily available to the public,
all of which are highly confidential and proprietary and all of which were
developed by III at great effort and expense. Employee further acknowledges that
the services to be performed by him under this Agreement are of a special,
unique, unusual, extraordinary and intellectual character, that the business of
III will be conducted throughout the world (the "Territory"), that its products
will be marketed throughout the Territory, that III competes and will compete in
nearly all of its business activities with other organizations which are located
in nearly any part of the Territory and that the nature of the relationship of
Employee with III is such that Employee is capable of competing with III from
nearly any location in the Territory. In recognition of the foregoing, Employee
covenants and agrees:
(i) That he will keep secret all confidential matters of III
and not disclose them to anyone outside of III, either during or after the Term,
except with III's prior written consent;
-3-
<PAGE> 34
(ii) That he will not make use of any of such confidential
matters for his own purposes or the benefit of anyone other than III; and
(iii) That he will deliver promptly to III on termination of
this Agreement, or at any time III may so request, all confidential memoranda,
notes, records, reports and other confidential documents (and all copies
thereof) relating to the business of III, which he may then possess or have
under his control.
8. Restriction on Competition. In recognition of the considerations
described in Section 7 hereof and that the following covenant is a specific
condition for the purchase by III of all of the shares of the capital stock of
QPI owned by Employee, Employee covenants and agrees that, during the Term and
for a period of two (2) years thereafter, Employee will not, directly or
indirectly, (A) enter into the employ of, or render any services to, any person,
firm or corporation engaged in any business competitive with the business of III
or QPI in any part of the Territory in which III or QPI is actively engaged, or
proposes to engage, in business on the date of termination; (B) engage in any
such business for his own account; (C) become interested in any such business as
an individual, partner, shareholder, creditor, director, officer, principal,
agent, employee, trustee, consultant, advisor, franchisee or in any other
relationship or capacity; (D) contact or solicit, or attempt to contact or
solicit, any person, business or enterprise which has been contacted, orally or
in writing, by III or QPI as a potential customer on or prior to the date of
termination; or (E) hire, subcontract, employ or engage, or contact or solicit,
or attempt to contact or solicit, for the purpose of hiring, contracting,
employing or engaging, any person or entity who was an employee or subcontractor
of III or QPI on or prior to the date of termination; provided, however, that
(x) the provisions of clause (A) shall not be deemed to preclude Employee from
engagement by a corporation some of the activities of which are competitive with
the business of III or QPI if Employee's engagement does not relate, directly or
indirectly, to such competitive business and (y) nothing contained in this
Section 8 shall be deemed to prohibit Employee from acquiring or holding, solely
for investment, publicly traded securities of any corporation some of the
activities of which are competitive with the business of III so long as such
securities do not, in the aggregate, constitute more than 2% of any class or
series of outstanding securities of such corporation. Notwithstanding the
foregoing, in the event III commits a material breach of its obligations under
this Agreement and its obligations to make the payments specified in Section 1.2
of that certain Stock Purchase Agreement dated February __, 1992 by and among
III, Employee and Michael J. Pryslak, the restrictions set forth in this Section
8 shall terminate.
-4-
<PAGE> 35
9. Specific Remedies. If Employee commits a breach of any of the
provisions of Sections 6, 7 or 8 hereof, such violation shall be deemed to be
grounds for termination pursuant to Section 5(a) hereof and III shall have (i)
the right to have such provisions specifically enforced by any court having
equity jurisdiction, it being acknowledged and agreed that any such breach will
cause irreparable injury to III and that money damages will not provide an
adequate remedy to III, and (ii) the right to require Employee to account for
and pay over to III all compensation, profits, monies, accruals, increments and
other benefits (collectively "Benefits") derived or received by Employee as a
result of any transaction constituting a breach of any of the provisions of
Sections 6, 7 or 8, and Employee hereby agrees to account for and pay over such
Benefits to III.
10. Independence, Severability and Non-Exclusivity. Each of the
rights enumerated in Sections 6, 7 or 8 hereof and the remedies enumerated in
Section 9 hereof shall be independent of the others and shall be in addition to
and not in lieu of any other rights and remedies available to III at law or in
equity. If any of the covenants contained in Sections 6, 7 or 8, or any part of
any of them, is hereafter construed or adjudicated to be invalid or
unenforceable, the same shall not affect the remainder of the covenant or
covenants or rights or remedies which shall be given full effect without regard
to the invalid portions. The parties intend to and do hereby confer jurisdiction
to enforce the covenants contained in Sections 6, 7 or 8 and the remedies
enumerated in Section 9 upon the courts of any state of the United States and
any other governmental jurisdiction within the geographical scope of such
covenants. If any of the covenants contained in Sections 6, 7 or 8 is held to be
invalid or unenforceable because of the duration of such provision or the area
covered thereby, the parties agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision and in
its reduced form said provision shall then be enforceable. No such holding of
invalidity or unenforceability in one jurisdiction shall bar or in any way
affect III's right to the relief provided in Section 9 or otherwise in the
courts of any other state or jurisdiction within the geographical scope of such
covenants as to breaches of such covenants in such other respective states or
jurisdictions, such covenants being, for this purpose, severable into diverse
and independent covenants.
11. Successors; Binding Agreement. This Agreement shall be binding
upon and inure to the benefit of, and be enforceable by, the parties hereto and
their respective personal or legal representatives, executors, administrators,
administrators cta, heirs, distributees, devisees, legatees, successors and
assigns.
-5-
<PAGE> 36
12. Notices. All notices, consents or other communications required
or permitted to be given by any party hereunder shall be in writing (including
telecopy or other similar writing) and shall be given by personal delivery,
certified or registered mail, postage prepaid, or telecopy (or other similar
writing) as follows:
To III:
1315 Washington Blvd.
Stamford, Connecticut
Attn: Mr. Robert N. Unnold
Chief Executive Officer
Telecopy: 800-554-9157
With a copy to:
Brown Raysman & Millstein
120 West 45th Street
New York, New York 10036
Attn: Michael Hirschberg, Esq.
Telecopy: 212-840-2429
To Employee:
2020 South Fairplay Street
Aurora, Colorado 80014-4526
Telecopy: 303-369-8791
With a copy to:
T. Michael Carrington, Esq.
3201 South Tamarac Drive, Suite 204
Denver, Colorado 80231
Telecopy: 303-745-1585
or at such other address or telecopy number (or other similar number) as either
party may from time to time specify to the other. Any notice, consent or other
communication required or permitted to be given hereunder shall have been deemed
to be given on the date of mailing, personal delivery or telecopy or other
similar means (provided the appropriate answerback is received) thereof and
shall be conclusively presumed to have been received on the second business day
following the date of mailing or, in the case of personal delivery or telecopy
or other similar means, the day of delivery thereof, except that a change of
address shall not be effective until actually received.
13. Modifications and Waivers. No term, provision or condition of
this Agreement may be modified or discharged unless such modification or
discharge is authorized by the Board of Directors of III and is agreed to in
writing and signed by
-6-
<PAGE> 37
Employee. No waiver by either party hereto of any breach by the other party
hereto of any term, provision or condition of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
14. Entire Agreement. This Agreement constitutes the entire
understanding between the parties hereto relating to the subject matter hereof,
superseding all negotiations, prior discussions, preliminary agreements and
agreements relating to the subject matter hereof made prior to the date hereof.
15. Law Governing. Except as otherwise explicitly noted, this
Agreement shall be governed by and construed in accordance with the laws of the
State of New York (without giving effect to conflicts of law).
16. Invalidity. Except as otherwise specified herein, the invalidity
or unenforceability of any term or terms of this Agreement shall not invalidate,
make unenforceable or otherwise affect any other term of this Agreement which
shall remain in full force and effect.
17. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
18. Attorneys' Fees. In the event of any litigation hereunder, the
prevailing party shall be entitled to recover the reasonable attorneys' fees and
other costs incident to such litigation, including appeals, from the losing
party.
19. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year set forth above.
INTELLIGENT INFORMATION INCORPORATED
By: _____________________________________
` Robert M. Unnold
Chief Executive Officer
_________________________________
Dennis M. Roland
-7-
<PAGE> 38
EXHIBIT B-2
EMPLOYMENT AGREEMENT
AGREEMENT dated this ____ day of February, 1992, by and between
INTELLIGENT INFORMATION INCORPORATED, a Delaware corporation with principal
executive offices at 1315 Washington Blvd., Stamford, Connecticut 06902 ("III"),
and MICHAEL J. PRYSLAK, residing at 10850 SW 42nd Street, Miami, Florida 33165
("Employee").
W I T N E S S E T H :
III is desirous of employing Employee, and Employee is desirous of
being employed by III, all upon the terms and subject to the conditions
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment. III agrees to employ Employee, and Employee agrees to
be employed by III, upon the terms and subject to the conditions of this
Agreement.
2. Term. The employment of Employee by III as provided in Section 1
will be for a period of one (1) year commencing on the date hereof, unless
sooner terminated as hereinafter provided (the "Term"), and shall automatically
renew from year to year thereafter unless either party gives at least sixty (60)
days prior written notice of termination.
3. Duties; Best Efforts. Employee shall be responsible for
maintaining and enhancing the Quote Alert System owned by III's wholly-owned
subsidiary Quotes Plus..., Inc. ("QPI") and shall perform such other duties and
responsibilities in reasonable support of the goals of III which may be assigned
to him from time to time by the Chief Executive Officer of III. Employee shall
devote an average of twenty (20) hours per week, during normal business hours,
to the business and affairs of III and shall use his best efforts to advance the
best interests of III.
4. Compensation.
(a) Base Salary. III shall pay to Employee a base salary (the "Base
Salary") at a rate of $24,000 per annum, payable in equal semi-monthly
installments during the Term.
(b) Out-of-Pocket-Expenses. III shall promptly pay to Employee the
reasonable expenses incurred by him in the performance of his duties hereunder,
including, without limitation, those incurred in connection with business
related travel or entertainment, or, if such expenses are paid directly by
Employ-
<PAGE> 39
ee, shall promptly reimburse him for such payment, provided that Employee
properly accounts therefor.
(c) Participation in Benefit Plans. Employee shall be entitled to
participate in or receive benefits under any pension plan, profit sharing plan,
health and accident plan or any other employee benefit plan or arrangement made
available by III to its employees, with the minimum being a paid family health
plan.
(d) Bonus. Employee shall receive a bonus of $5,000 in the event
that QPI secures the extension of the ongoing pilot programs with the New York
Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc. and the Options Price Reporting Authority.
5. Termination. Employee's employment hereunder shall be terminated
upon Employee's death and may be terminated as follows:
(a) In the event that Employee hereafter (i) shall fail to comply
with any of the material terms of this Agreement, (ii) shall fail to perform his
duties hereunder, (iii) shall disregard policy directions from the President or
the Board of Directors of III, (iv) shall engage, in his capacity as an employee
of III, in gross misconduct injurious to III or (v) shall be convicted of a
crime involving moral turpitude.
(b) Upon not less than thirty (30) days' written notice in the event
that (i) Employee shall have become so incapacitated as to be unable to resume
within the ensuing six (6) months his employment hereunder by reason of physical
or mental illness or injury or (ii) Employee shall not have substantially
performed his duties hereunder for three (3) consecutive months by reason of any
such physical or mental illness or injury.
If Employee disputes any termination pursuant to this Section 5,
either Employee or III may seek to have such dispute adjudicated by arbitration
in accordance with the then existing rules of the American Arbitration
Association.
6. Covenant Regarding Inventions and Copyrights. Employee shall
disclose promptly to III any and all inventions, discoveries, improvements and
patentable or copyrightable works initiated, conceived or made by him, either
alone or in conjunction with others, during the Term and related to the business
or activities of III, and he assigns all of his interest therein to III or its
nominee; whenever requested to do so by III, Employee shall execute any and all
applications, assignments or other instruments which III shall deem necessary to
apply for and obtain letters patent or copyrights of the United States or any
foreign country, or otherwise protect III's interest therein.
-2-
<PAGE> 40
These obligations shall continue beyond the conclusion of the Term with respect
to inventions, discoveries, improvements or copyrightable works initiated,
conceived or made by Employee during the Term and shall be binding upon
Employee's assigns, executors, administrators and other legal representatives.
7. Protection of Confidential Information. Employee acknowledges
that he has been and will be provided with information about, and his employment
by III will, throughout the Term, bring him into close contact with, many
confidential affairs of III, including proprietary information about costs,
profits, markets, sales, products, key personnel, pricing policies, operational
methods, technical processes and other business affairs and methods, plans for
future developments and other information not readily available to the public,
all of which are highly confidential and proprietary and all of which were
developed by III at great effort and expense. Employee further acknowledges that
the services to be performed by him under this Agreement are of a special,
unique, unusual, extraordinary and intellectual character, that the business of
III will be conducted throughout the world (the "Territory"), that its products
will be marketed throughout the Territory, that III competes and will compete in
nearly all of its business activities with other organizations which are located
in nearly any part of the Territory and that the nature of the relationship of
Employee with III is such that Employee is capable of competing with III from
nearly any location in the Territory. In recognition of the foregoing, Employee
covenants and agrees:
(i) That he will keep secret all confidential matters of III
and not disclose them to anyone outside of III, either during or after the Term,
except with III's prior written consent;
(ii) That he will not make use of any of such confidential
matters for his own purposes or the benefit of anyone other than III; and
(iii) That he will deliver promptly to III on termination of
this Agreement, or at any time III may so request, all confidential memoranda,
notes, records, reports and other confidential documents (and all copies
thereof) relating to the business of III, which he may then possess or have
under his control.
8. Restriction on Competition. In recognition of the considerations
described in Section 7 hereof and that the following covenant is a specific
condition for the purchase by III of all of the shares of the capital stock of
QPI owned by Employee, Employee covenants and agrees that, during the Term and
for a period of two (2) years thereafter, Employee will not, directly or
indirectly, (A) enter into the employ of, or render any
-3-
<PAGE> 41
services to, any person, firm or corporation engaged in any business competitive
with the business of III or QPI in any part of the Territory in which III or QPI
is actively engaged, or proposes to engage, in business on the date of
termination; (B) engage in any such business for his own account; (C) become
interested in any such business as an individual, partner, shareholder,
creditor, director, officer, principal, agent, employee, trustee, consultant,
advisor, franchisee or in any other relationship or capacity; (D) contact or
solicit, or attempt to contact or solicit, any person, business or enterprise
which has been contacted, orally or in writing, by III or QPI as a potential
customer on or prior to the date of termination; or (E) hire, subcontract,
employ or engage, or contact or solicit, or attempt to contact or solicit, for
the purpose of hiring, contracting, employing or engaging, any person or entity
who was an employee or subcontractor of III or QPI on or prior to the date of
termination; provided, however, that (x) the provisions of clause (A) shall not
be deemed to preclude Employee from engagement by a corporation some of the
activities of which are competitive with the business of III or QPI if
Employee's engagement does not relate, directly or indirectly, to such
competitive business and (y) nothing contained in this Section 8 shall be deemed
to prohibit Employee from acquiring or holding, solely for investment, publicly
traded securities of any corporation some of the activities of which are
competitive with the business of III so long as such securities do not, in the
aggregate, constitute more than 2% of any class or series of outstanding
securities of such corporation. Notwithstanding the foregoing, in the event III
commits a material breach of its obligations under this Agreement and its
obligations to make the payments specified in Section 1.2 of that certain Stock
Purchase Agreement dated February __, 1992 by and among III, Employee and Dennis
M. Roland, the restrictions set forth in this Section 8 shall terminate.
9. Specific Remedies. If Employee commits a breach of any of the
provisions of Sections 6, 7 or 8 hereof, such violation shall be deemed to be
grounds for termination pursuant to Section 5(a) hereof and III shall have (i)
the right to have such provisions specifically enforced by any court having
equity jurisdiction, it being acknowledged and agreed that any such breach will
cause irreparable injury to III and that money damages will not provide an
adequate remedy to III, and (ii) the right to require Employee to account for
and pay over to III all compensation, profits, monies, accruals, increments and
other benefits (collectively "Benefits") derived or received by Employee as a
result of any transaction constituting a breach of any of the provisions of
Sections 6, 7 or 8, and Employee hereby agrees to account for and pay over such
Benefits to III.
10. Independence, Severability and Non-Exclusivity. Each of the
rights enumerated in Sections 6, 7 or 8 hereof and
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<PAGE> 42
the remedies enumerated in Section 9 hereof shall be independent of the others
and shall be in addition to and not in lieu of any other rights and remedies
available to III at law or in equity. If any of the covenants contained in
Sections 6, 7 or 8, or any part of any of them, is hereafter construed or
adjudicated to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants or rights or remedies which shall be
given full effect without regard to the invalid portions. The parties intend to
and do hereby confer jurisdiction to enforce the covenants contained in Sections
6, 7 or 8 and the remedies enumerated in Section 9 upon the courts of any state
of the United States and any other governmental jurisdiction within the
geographical scope of such covenants. If any of the covenants contained in
Sections 6, 7 or 8 is held to be invalid or unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall have the power to reduce the duration
and/or area of such provision and in its reduced form said provision shall then
be enforceable. No such holding of invalidity or unenforceability in one
jurisdiction shall bar or in any way affect III's right to the relief provided
in Section 9 or otherwise in the courts of any other state or jurisdiction
within the geographical scope of such covenants as to breaches of such covenants
in such other respective states or jurisdictions, such covenants being, for this
purpose, severable into diverse and independent covenants.
11. Successors; Binding Agreement. This Agreement shall be binding
upon and inure to the benefit of, and be enforceable by, the parties hereto and
their respective personal or legal representatives, executors, administrators,
administrators cta, successors, heirs, distributees, devisees, legatees,
successors and assigns.
12. Notices. All notices, consents or other communications required
or permitted to be given by any party hereunder shall be in writing (including
telecopy or other similar writing) and shall be given by personal delivery,
certified or registered mail, postage prepaid, or telecopy (or other similar
writing) as follows:
To III:
1315 Washington Blvd.
Stamford, Connecticut
Attn: Mr. Robert M. Unnold
Chief Executive Officer
Telecopy: 800-554-9157
-5-
<PAGE> 43
With a copy to:
Brown Raysman & Millstein
120 West 45th Street
New York, New York 10036
Attn: Michael Hirschberg, Esq.
Telecopy: 212-840-2429
To Employee:
10850 SW 42nd Street
Miami, Florida 33165
Telecopy: 305-223-5671
With a copy to:
Edmund P. Russo, Esq.
Russo & Baker, P.A.
4675 Ponce de Leon Blvd., Suite 301
Coral Gables, Florida 33146
Telecopy: (305) 665-4011
or at such other address or telecopy number (or other similar number) as either
party may from time to time specify to the other. Any notice, consent or other
communication required or permitted to be given hereunder shall have been deemed
to be given on the date of mailing, personal delivery or telecopy or other
similar means (provided the appropriate answerback is received) thereof and
shall be conclusively presumed to have been received on the second business day
following the date of mailing or, in the case of personal delivery or telecopy
or other similar means, the day of delivery thereof, except that a change of
address shall not be effective until actually received.
13. Modifications and Waivers. No term, provision or condition of
this Agreement may be modified or discharged unless such modification or
discharge is authorized by the Board of Directors of III and is agreed to in
writing and signed by Employee. No waiver by either party hereto of any breach
by the other party hereto of any term, provision or condition of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
14. Entire Agreement. This Agreement constitutes the entire
understanding between the parties hereto relating to the subject matter hereof,
superseding all negotiations, prior discussions, preliminary agreements and
agreements relating to the subject matter hereof made prior to the date hereof.
15. Law Governing. Except as otherwise explicitly noted, this
Agreement shall be governed by and construed in
-6-
<PAGE> 44
accordance with the laws of the State of New York (without giving effect to
conflicts of law).
16. Invalidity. Except as otherwise specified herein, the invalidity
or unenforceability of any term or terms of this Agreement shall not invalidate,
make unenforceable or otherwise affect any other term of this Agreement which
shall remain in full force and effect.
17. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
18. Attorneys' Fees. In the event of any litigation hereunder, the
prevailing party shall be entitled to recover the reasonable attorneys' fees and
other costs incident to such litigation, including appeals, from the losing
party.
19. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year set forth above.
INTELLIGENT INFORMATION INCORPORATED
By:______________________________________
Robert M. Unnold
Chief Executive Officer
______________________________________
Michael J. Pryslak
-7-
<PAGE> 45
EXHIBIT C
RELEASE
In consideration for the acquisition by Intelligent Information
Incorporated ("III") of all of the shares of capital stock of Quotes, Plus. . .,
Inc. ("QPI") owned by the undersigned and for other good and valuable
consideration, receipt of which is hereby acknowledged, the undersigned hereby
fully and forever releases, remises and discharges QPI and its successors and
assigns from any and all claims that the undersigned has had, may have had or
now has against QPI for or by reason of any matter, cause or thing whatsoever.
The undersigned represents and warrants that he has not assigned or
in any other way conveyed, transferred or encumbered all or any portion of the
claims or rights covered by this Release.
IN WITNESS WHEREOF, the undersigned has duly executed this Release
this 27th day of February, 1992.
______________________________________
Michael J. Pryslak
Sworn to before me this
27th day of February, 1992
_____________________________
Notary Public
<PAGE> 46
RELEASE
In consideration for the acquisition by Intelligent Information
Incorporated ("III") of all of the shares of capital stock of Quotes, Plus. .
., Inc. ("QPI") owned by the undersigned and for other good and valuable
consideration, receipt of which is hereby acknowledged, the undersigned hereby
fully and forever releases, remises and discharges QPI and its successors and
assigns from any and all claims that the undersigned has had, may have had or
now has against QPI for or by reason of any matter, cause or thing whatsoever.
The undersigned represents and warrants that he has not assigned or
in any other way conveyed, transferred or encumbered all or any portion of the
claims or rights covered by this Release.
IN WITNESS WHEREOF, the undersigned has duly executed this Release
this 27th day of February, 1992.
______________________________________
Dennis M. Roland
Sworn to before me this
27th day of February, 1992
____________________________
Notary Public
-2-
<PAGE> 47
EXHIBIT D
February __, 1992
Mr. Michael Jr. Pryslak
10850 SW 42nd Street
Miami, Florida 33165
Mr. Dennis M. Roland
2020 South Fairplay Street
Aurora, Colorado 80014-4526
Re: Stock Purchase Agreement by and among Intelligent Information
Incorporated, Michael J. Pryslak and Dennis M. Roland
Gentlemen:
We are counsel to Intelligent Information Incorporated, a Delaware
corporation ("III"), in connection with that certain Stock Purchase Agreement
(the "Agreement") dated February __, 1992 by and among III, Michael J. Pryslak
and Dennis Roland (the "Sellers"), and in connection with the consummation of
the transactions contemplated by the Agreement.
In so acting and as a basis for the opinions expressed below, we
have examined executed copies of the Agreement and the documents delivered in
connection with the Agreement (the "Documents"), certified copies of the
Certificate of Incorporation and By-Laws of III, minutes of the meetings of the
Board of Directors and stockholders of III and original or photostatic copies of
such other records and other documents as we have deemed relevant and necessary
for the opinions hereinafter set forth. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to original documents of all documents submitted
to us as certified or photostatic copies. As to various questions of fact
material to such opinions, we have relied upon certificates of officers of III
and certificates of public officials of the State of Delaware.
For purposes of the opinions expressed below, we have assumed that
the Sellers have all requisite power and authority and have taken all necessary
action to authorize, execute and deliver the Agreement and to consummate the
transactions contemplated thereby.
<PAGE> 48
Michael J. Pryslak -2- February __, 1992
Dennis M. Roland
Terms which are not otherwise defined herein have the respective
meanings ascribed to them in the Agreement.
Based upon and subject to the foregoing, we are of the opinion that:
(1) III is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power to own or lease its properties and assets and to carry on its business as
now conducted.
(2) III has full corporate power and authority to execute and
deliver the Agreement and the Documents and to carry out the transactions
contemplated thereby. III has duly authorized the execution and delivery of the
Agreement and the Documents and the transactions contemplated thereby, and no
other corporate proceedings on the part of III are necessary to authorize the
Agreement and the Documents and the transactions contemplated thereby. The
Agreement and the Documents have been duly executed and delivered by III and
constitute the valid and binding obligation of III enforceable against it in
accordance with their respective terms, except to the extent that such
enforcement may be limited by any applicable bankruptcy, reorganization,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally and except as such terms may be limited by the application of such
general principles of equity as a court with proper jurisdiction may apply.
(3) The execution, delivery and performance of the Agreement and the
Documents and the consummation of the transactions contemplated thereby will not
result in a breach in the terms or conditions of, or constitute a default under,
or violate, as the case may be: (a) any provision of any law, regulation or
ordinance, (b) the Certificate of Incorporation or By-Laws of III, (c) any
agreement, lease, mortgage or other instrument or undertaking, oral or written,
of which we are aware, to which III is a party or by which it or its properties
or assets is or may be bound or affected or (d) any judgment, order, writ,
injunction or decree of any court, administrative agency or governmental body.
We are counsel admitted to practice only in the State of New York,
and we express no opinion as to the applicable laws of any jurisdiction other
than those of the State of New York and the United States of America and the
General Corporation Law of the State of Delaware. This opinion has been
delivered for your
<PAGE> 49
Michael J. Pryslak -3- February __, 1992
Dennis M. Roland
use only in connection with the consummation of the transactions contemplated by
the Agreement and may not be relied upon by any other person.
Very truly yours,
BROWN RAYSMAN & MILLSTEIN
<PAGE> 50
EXHIBIT E
ASSIGNMENT OF PROPRIETARY PROPERTY
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, MICHAEL J. PRYSLAK and DENNIS M. ROLAND (the
"Assignors"), pursuant to that certain Stock Purchase Agreement dated February
27, 1992 by and among Intelligent Information Incorporated and the Assignors
(the "Agreement"), hereby sell, convey, transfer, assign and deliver to QUOTES,
PLUS. . ., INC. (the "Company") all of Assignors' right, title and interest in
and to the proprietary property more particularly described in Section 2.7 to
the Agreement and the related Schedule thereto (the "Proprietary Property"),
including, but not limited to, the following:
(i) the computer software program, routines and components
known collectively as the "Quote Alert System" and all programs, routines
and components relating thereto, including, but not limited to, all
present and predecessor versions of such programs, routines and components
(whether or not actually marketed), related source and object code, all
specifications, documentation and written descriptions of such programs,
products or components thereof, in each case owned by the Assignors and
used in the business of the Company (the "Programs");
(ii) all trade names and trade and service marks and
applications and licenses relating to the Programs, and all writings
relating to the Programs for which copyright is claimed, including, but
not limited to, (A) the pending trademark/service mark application for the
mark "Quote Alert" which was filed by Michael J. Pryslak on October 18,
1990 with the United States Patent and Trademark Office, and now assigned
Serial Number 74/10B661 and (B) the Certificate of Copyright Registration,
Registration Number TX 2-787-062, effective March 3, 1990, issued by the
United States Copyright Office to the Company; and
(iii) any and all other technical knowledge, proprietary
rights, patented or unpatented inventions, trade secrets, analytical
methodology, processes, data and all other information or experience
possessed by the Assignors relating to the Programs or which the Assignors
have the right to use, including, but not limited to, specifications,
documents and written descriptions, user guides and interfaces,
installation guides, narrative descriptions, screen and file layouts,
logic flow diagrams, command sequences, source and load modules, output
reports, test or other data, test programs, and other necessary
information that is owned or used by the Assignors in connection with the
Company's business.
<PAGE> 51
This Assignment may be executed in counterparts, each of which shall
be deemed to be an original but all of which together shall constitute but one
and the same instrument.
This Assignment shall be binding upon and inure to the benefit of
the Assignors and the Company and their respective heirs, successors and
assigns.
This Assignment shall be governed by and construed in accordance
with the laws of the State of New York (without giving effect conflicts of
laws).
If any provision of this Assignment is held invalid or
unenforceable, the remainder of this Assignment and the application of provision
to persons or circumstances other than those to which it is held invalid or
unenforceable shall not be affected thereby.
The Assignors agree, without additional compensation, to assist the
Company in claiming, perfecting and recording the assignment of the rights
granted hereunder, including, without limitation, executing additional documents
as requested by the Company.
The Assignors hereby constitute and appoint the Company and its
successors and assigns as the Assignors' true and lawful attorney-in-fact, with
full power of substitution, to take any appropriate action in connection with
said Proprietary Property, in the Company's name and stead, it being understood
that the foregoing powers are coupled with an interest and are and shall be
irrevocable.
IN WITNESS WHEREOF, the undersigned have duly executed this
Assignment on this 27th day of February, 1992.
_________________________________________
Michael J. Pryslak
_________________________________________
Dennis M. Roland
-2-
<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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
1
<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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
2
<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.
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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. [*]
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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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 [*]. III will pay AWS [*].
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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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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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 [*]. Accrued Co-op funds belong to III until released
for reimbursement of claims for eligible and approved activities.
[*]
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. [*]
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>
AWS & III Confidential
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
18
<PAGE> 19
<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>
AWS & III Confidential
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
19
<PAGE> 20
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.
AWS & III Confidential
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
20
<PAGE> 21
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.
AWS & III Confidential
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
21
<PAGE> 22
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."
AWS & III Confidential
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
22
<PAGE> 1
EXHIBIT 10.10
Preferred Content License Agreement
This Content License Agreement ("Agreement") is entered into this 1 day of
MAY, 1997 by and between AT&T Wireless Data, Inc. d/b/a AT&T Wireless Services,
a Delaware corporation ("AWS") and INTELLIGENT INFORMATION INCORPORATED, a
DELAWARE corporation ("Content Licensor") for Content Licensor to provide a
content offering for the AT&T PocketNet(TM) Service ("PocketNet" or "PocketNet
Service" shall mean the wireless data service offered by AWS and interconnected
networks which enables properly equipped devices to wirelessly access
information via networked applications using TCP/IP access protocols such as
HDML).
The parties agree as follows:
1. License Grant
1.1 Within sixty days of execution of this Agreement, Content Licensor
will make available to AWS its Offering ("Offering" shall mean an HDML enabled
content offering developed, maintained, and provided by a content licensor that
an End User may retrieve through the PocketNet Service) for use with the
PocketNet Service. ("HDML" shall mean the handheld device mark up language that
is used to select, format, interpret and communicate data to or from an AT&T
PocketNet device through the AT&T PocketNet gateway.) ("End User" shall mean the
AWS customer using the PocketNet Service)
1.2 Content Licensor grants to AWS during the term of this Agreement a
non-exclusive limited worldwide royalty-free right and license solely to use,
distribute, reproduce, display, transmit, advertise and publicly perform the
Offering as required to provide PocketNet Service and to permit End Users to
access the Offering.
1.3 AWS' license rights granted under this Section 2 shall extend to any
new versions or modifications to the Offering during the term of this Agreement.
1.4 AWS will support Content Licensor's development with a complimentary
membership in AWS's Developers Program.
1.5 AWS will provide Content Licensor access to its fax service for
Content Licensor's development and provision of a fax service in conjunction
with the Offering. Content Licensor may sell advertising banners on the faxed
pages; provided that the banner space will appear on Content Licensor's
informational pages only and will not exceed 20% of the space available for
printing on any given faxed page. Content Licensor is prohibited from selling
such advertising space to any individual or entity that competes with AWS in the
provision of either cellular or data service.
2. Trade Name and Trademarks
2.1 Content Licensor hereby grants AWS the right to use and publish the
trademarks and trade names now or hereafter owned or used by Content Licensor
which are associated with Content Licensor or the Offering ("Content Licensor's
Trademarks") for purposes of advertising and marketing of the PocketNet Service,
provided such use and publication complies with Content Licensor's guidelines,
attached.
2.2 Within a commercially reasonable time after execution of this
Agreement, AWS will display Content Licensor's name or logo on its internet web
site with the intent of creating a hypertext link to Content Licensor's site.
2.3 AWS reserves all right, title and interest in and to its trade name
and trademarks. Accordingly, Content Licensor shall not use any trade name or
trademarks of AWS without the prior written consent of AWS.
3. Connectivity. Content Licensor will connect to the AWS server via the
Internet.
4. Representations, Warranties, and Covenants of Content Licensor
Content Licensor hereby represents, warrants, and covenants to AWS that:
4.1 Content Licensor has the full and exclusive right and power to enter
into and perform according to the terms of this Agreement, and that it has the
exclusive right to grant to AWS each of the rights herein granted. Without
limiting the foregoing, Content Licensor covenants that (i) use and broadcast of
the Offering 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 Content Licensor to contribute to the Offering; (ii) the Offering 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 Offering will be
injurious to the End User.
4.2 Content Licensor is not aware of any claim by any third parties
adverse to Content Licensor's or the Offering's patent, trade secret, copyright,
trademark or other rights in the Offering.
5. Term; Termination
5.1 This Agreement will be for an initial one year term commencing on the
date first written above and shall continue on a month to month basis
thereafter. Either party may terminate this Agreement at any time and for any
reason, by providing the other party with thirty (30) days prior written notice.
5.2 AWS reserves the right to suspend access to the Offering by its End
Users where, in AWS' reasonable opinion, continued access to the Offering 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 Offering
upon the termination of the event or modification by Content Licensor to the
extent that the risk has been rendered insignificant.
5.3 In the event Content Licensor's Offering is inaccessible, in whole or
in part, due to circumstances within Content Licensor's control for a period of
five (5) consecutive days and AWS has notified Content Licensor of the problem,
Content Licensor shall make the Offering wholly accessible within five (5) days
of such notification. If the Offering remains inaccessible or has been
inaccessible in whole or in part for over 50% of the days after notification,
AWS may terminate this Agreement.
6. Miscellaneous
6.1 Confidential Information.
6.1.1 As used in this Agreement, "Confidential Information" means
any information of either party that is not generally known to the public,
whether of a technical, business or other nature (including, but not necessarily
limited to, trade secrets, know-how and information relating to the tech-
1
<PAGE> 2
Preferred Content License Agreement
nology, customers, leads, customer contacts, business plans, promotional and
marketing activities, finances and other business affairs of such party, and the
terms of this Letter Agreement). Any information disclosed by either party in
connection with the relationship described in this Letter Agreement will be
treated as the Disclosing Party's Confidential Information. In the performance
of or otherwise in connection with this Letter Agreement, any party (the
"Receiving Party") may receive certain Confidential Information of the other
party (the "Disclosing Party").
6.1.2 The Receiving Party, except as expressly provided in this
Letter Agreement, will not disclose such Confidential Information to anyone
without the Disclosing Party's prior written consent. The Receiving Party will
restrict the possession, knowledge, development and use of Confidential
Information to its owners, officers, employees, agents, subcontractors and
entities controlled by it (collectively, "Personnel") who have a need to know
Confidential Information in connection with the purposes set forth in this
Letter Agreement. The Receiving Party's Personnel will have access only to the
Confidential Information they need for such purposes. Both parties will ensure
that its Personnel comply with this Letter Agreement. The Receiving Party will
take all reasonable measures to avoid disclosure, dissemination or unauthorized
use of Confidential Information, including, at a minimum, those measures it
takes to protect its own confidential information of a similar nature.
6.1.3 The provisions of Section 6.1 will not apply to any
information that (a) is or becomes publicly available without breach of this
Letter Agreement, (b) can be shown by documentation to have been known to the
Receiving Party at the time of its receipt from the Disclosing Party, (c) is
rightfully received from a third party who did not acquire or disclose such
information by a wrongful or tortious act, (d) can be shown by documentation to
have been independently developed by the Receiving party without reference to
any Confidential Information, or (e) is required to be disclosed to any
governmental entity with jurisdiction over it.
6.2 This Agreement will not create an exclusive relationship or any
partnership, joint venture or agency relationship between AWS and Content
Licensor.
6.3 Content Licensor 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 Offering 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 Content Licensor contained herein; (iii) any breach of any covenant
or agreement to be performed by Licensor hereunder; or (iv) any willful
misconduct or negligence by Content Licensor. Content Licensor 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.
6.4 EXCEPT AS PROVIDED IN 6.3 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 IN-DIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF SUCH PARTY'S FAILURE TO PERFORM UNDER THIS
AGREEMENT.
6.5 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 HEREIN,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF
PERFORMANCE.
6.6 The parties shall comply with all applicable federal, state and local
laws, orders and regulations in performing the terms and conditions of this
Agreement.
6.7 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 Content Licensor.
6.8 All notices in connection with this Agreement shall be deemed given as
of the day they are mailed or transmitted by electronic facsimile 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.
6.9 Content Licensor may not assign this Agreement, or any portion
thereof, to any third party without the express written consent of AWS.
6.10 This Agreement shall not be modified except by written agreement.
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.
The parties have executed this Agreement on the date first written above.
AT&T Wireless Data, Inc
d/b/a AT&T Wireless Services
By:
---------------------------------
Its: VP Marketing & Sales
---------------------------------
Address: 10230 NE Points Drive
Kirkland, WA 93033
Attn: Legal Dept.
Phone: 206-803-4000
[Content Licensor]
INTELLIGENT INFORMATION INCORPORATED
By:
---------------------------------
Its: CHIEF EXECUTIVE OFFICER
---------------------------------
Address: ONE DOCK STREET
-----------------------------
STAMFORD, CT 06902
-----------------------------
Attn: ROBERT M. UNNOLD
--------------------------------
Phone (203) 969-0020
--------------------------------
2
<PAGE> 1
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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;
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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 [*]
5000 - 19999 [*]
20000 - 29999 [*]
30000 - 39999 [*]
Total number of subscribers greater than 40000 [*]
</TABLE>
3) Bell Mobility will enter a promotional period immediately following launch
on May 12, 1998. During this period, III will [*]
4) Bell Mobility and III agree to investigate advertising opportunities
associated with this service as a way of generating additional revenue.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
Intelligent Information Incorporated - 13 - CONFIDENTIAL
<PAGE> 14
APPENDIX C
TRADEMARKS
"Powered by iii"
Reseller shall follow "Powered by iii" Guidelines for Use, Exhibit 1.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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."
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
1
<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;
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
2
<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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
3
<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
- -------------------------------------
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
5
<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."
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
6
<PAGE> 7
Information Services
- --------------------------------------------------------------------------------
APPENDIX B
Schedule 1
- --------------------------------------------------------------------------------
Product Pricing
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
New York Times General News Processing - Group Approach: [*]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value Package(1): [*]
Choose from one of the following:
1. Weather Forecast
2. Lottery
3. Horoscope
4. Sports
5. General Business News
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Advanced Package(1): [*]
Choose a total of two from the value and advanced packages:
6. Health News
7. Company News
8. Sports
9. Quotes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A La Carte: [*]
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
[*]: 19. 40 On Demand Quotes - note: [*]
- --------------------------------------------------------------------------------
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<PAGE> 10
Information Services
- --------------------------------------------------------------------------------
Schedule 4
Volume Discounts
[*]
- ---------
[*]
[*]
[*]
[*]
Schedule 5
Miscellaneous
[*]
[*]
III will participate with Omnipoint promotions on an ad hoc basis.
- --------------------------------------------------------------------------------
Omnipoint Communications Inc. & Intelligent Information: Proprietary 10 11/8/96
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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
------------------------ -------------
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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 [*] 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 [*]
---------------------------------------------------------
10,000 to 19,999 [*]
---------------------------------------------------------
20,000+ [*]
---------------------------------------------------------
</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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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 [*]
-----------------------------------------------------------
5,000 to 9,999 [*]
-----------------------------------------------------------
10,000+ [*]
-----------------------------------------------------------
</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
[*] 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 [*] 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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
Omnipoint Confidential 4
<PAGE> 5
SCHEDULE 7
Marketing and Promotional Activities
1. Upon the execution of this Amendment, III will issue [*] 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 [*]
o [*] 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).
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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. [*]
2. [*]
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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 [*]. 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.
[*]
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. [*]
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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. [*]
b. III represents that the charges and any increases thereof are and
will [*]. 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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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 [*] 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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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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
------ -------
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
Page 10
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APPENDIX B
SERVICE AND PACKAGE RATES AND CHARGES
Number of Services in Package Monthly Price per Subscriber*
- ----------------------------- ------------------------------
2 [*]
3 [*]
4 [*]
5 [*]
6 [*]
[*]
Volume Discount
[*]
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<PAGE> 18
APPENDIX C
TRADEMARKS
1. "Powered by iii"
SBMS shall follow "Powered by iii" Guidelines for Use, Exhibit 1.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
Page 18
<PAGE> 19
APPENDIX D
FINANCIAL INCENTIVES
Marketing Coop
[*]
Market Development
[*]
Quick Start Goal
[*]
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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 [*]. Accrued Co-op funds belong to III until released
for reimbursement of claims for eligible and approved activities.
[*]
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. [*]
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
-------------------------- -----------------------
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
Page 2 of 2
<PAGE> 3
FIRST AMENDED APPENDIX D
FINANCIAL INCENTIVES
Marketing Coop
[*]
Market Development
[*]
Quick Start Goal
[*]
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from
this exhibit pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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>
CONFIDENTIAL TREATMENT REQUESTED
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exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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>
CONFIDENTIAL TREATMENT REQUESTED
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exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
<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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
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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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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>
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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,
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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 [*] 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 [*] 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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
4
<PAGE> 5
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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<PAGE> 6
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
6
<PAGE> 7
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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<PAGE> 8
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
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
8
<PAGE> 9
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
9
<PAGE> 10
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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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<PAGE> 11
APPENDIX B
PRODUCT/SERVICE DESCRIPTION
Basic Package [*]
- - 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 [*]
- - 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.
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
11
<PAGE> 12
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 : [*].
- - VoiceCare (IVR) - [*]
- - III agrees to [*]
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. [*].
CONFIDENTIAL TREATMENT REQUESTED Brackets have been used to identify information
which has been omitted from this exhibit pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.
12
<PAGE> 1
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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from
this exhibit pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- 1 -
<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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from
this exhibit pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from
this exhibit pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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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.
Intelligent Information Incorporated
Confidential
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from
this exhibit pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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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.
Intelligent Information Incorporated
Confidential
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from
this exhibit pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from
this exhibit pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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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.
Intelligent Information Incorporated
Confidential
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from
this exhibit pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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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 [*] of the agreed to selling price
charged by III, provided that III will be entitled to retain at
least [*] 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 [*] per Subscriber per month
minimum described above and III's [*] III ADMATTS (Advanced Data
Mining Tagging and Transaction System) services.
Intelligent Information Incorporated
Confidential
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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o III will also pay to TWCE [*] 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
[*] 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 [*] attributable to such advertising shall be [*]. TWCE shall
[*] and [*] as provided in paragraph 10 of this
Agreement. The [*] shall apply to content distributed by the III
ADMATTS system only, and no other advertising [*] 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 [*] 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 [*]. However, should incremental programming be
required at TWCE's written request on behalf of TWCE affiliates, then a [*] 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 [*], e.g., via banners, each month [*]. Thereafter
TWCE Affiliates will [*] 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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from
this exhibit pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from
this exhibit pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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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.
Intelligent Information Incorporated
Confidential
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from
this exhibit pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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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
CONFIDENTIAL TREATMENT REQUESTED
Brackets have been used to identify information which has been omitted from this
exhibit pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.
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<PAGE> 1
Exhibit 10.16
12/24/99
December 24, 1999
Mr. Steve Maloney
President & CEO
Intelligent Information, Inc.
181 Harbor Drive, 3rd Fl.
Stamford, CT 06902
Purchase of NBC TV Advertising Inventory
Dear Mr. Maloney:
This letter sets forth the agreement between the National Broadcasting
Company, Inc. ("NBC"), and Intelligent Information Incorporated. ("Advertiser")
with respect to NBC's agreement to provide Advertiser with the right to use
certain advertising inventory on NBC Television Network, NBC's owned and
operated television stations and on CNBC Cable Network and on any other mutually
agreed upon NBC television station or cable venture(collectively, "NBC TV") to
promote Advertiser and its wireless products and services only, subject to the
following terms and conditions:
1. Spots. (a) NBC shall provide Advertiser with the use of fifteen (15) and
thirty (30) second advertising spots (the "Spots") to be telecast on NBC TV on
the Dates, Days and Times mutually agreed by NBC and Advertiser; provided,
however, that in the event that no such agreement is reached with regard to the
number or value of Spots to be broadcast in any calendar quarter or year, NBC
may propose and implement a reasonable schedule for the broadcast of Spots in
accordance with the terms of Section 2(a) below and based upon Advertiser's
reasonable request for such schedule. An initial schedule for the first quarter
of 2000 shall be determined as soon as practicable following the date hereof.
All such Spots run by Advertiser shall be subject to NBC TV's standard terms and
conditions for such advertising which are described in the "Participating
Sponsorship Agreement" attached hereto as Exhibit A (the "Standard Terms") and
which are made a part of this Letter Agreement in their entirety; provided,
however, that in the case of a conflict between the terms of this Letter
Agreement and the terms of the Standard Terms, the terms of this Letter
Agreement shall govern. For purposes of the Standard Terms, Advertiser shall be
both the "Advertiser" and the "Agency" as such terms are used therein.
(b) The Spots shall promote Advertiser and its wireless products and
services only and may not advertise, promote or mention any other product,
service, television program, web site or third party whatsoever without the
prior written consent of NBC. In addition, with respect to the placement or
telecast of Advertiser's Spots in any particular Program, NBC may reject
<PAGE> 2
2
such placement or telecast if such placement or telecast would compete with or
violate the rights of any other advertiser, sponsor or supplier of such Program
or program category, as determined by NBC in its sole discretion and in good
faith; it being understood that NBC's aggregate commitments set forth in Section
2 below shall not be affected by any such rejection.
(c) On or before two weeks prior to the Advertiser's first scheduled
Spot, Advertiser shall deliver to NBC commercial material for the first of
Advertiser's Spots. Advertiser acknowledges that if it fails to deliver such
commercial material by such date, or such commercial material is rejected in
accordance with this Section 1, then NBC TV shall be deemed to have telecast
Advertiser's Spots for purposes hereof even if Advertiser's Spot is not actually
shown when the Program is telecast. If, after such date, Advertiser delivers any
new commercial material to NBC in compliance with this Section 1 and Advertiser
instructs NBC to use such new commercial material in lieu of the commercial
material previously delivered to NBC, then NBC will use reasonable commercial
efforts to telecast such new commercial material in the Spots as soon as
practicable after receipt of such commercial material but not later than 72
hours after receipt.
2. Value of Spots. NBC shall telecast Spots with a total spot value of
$2,500,000 (the "Total Spot Value") during the twenty-four (24) months
commencing on January 1, 2000 (the "Effective Date"). The value of each Spot for
purpose of this Agreement shall be calculated at 85% of the scatter market rate
in effect at the time such Spot is ordered. The parties agree that no agency
fees or other expenses may be deducted by Advertiser in any way in connection
with determining the number of shares of Series F Preferred Stock of Advertiser
to be paid to NBC pursuant to Section 3 hereof.
3. Payment for the Spots. (a) Advertiser shall deliver to NBC 631.25 shares of
the Series F Preferred Stock of Advertiser pursuant to the terms and conditions
of that certain Series F Preferred Stock Purchase Agreement dated as of the date
hereof between Advertiser and certain investors (the "Stock Purchase
Agreement").
(b) NBC shall provide Advertiser with a written report within 10
business days after the end of each calendar month after the Effective Date
during which Advertiser's Spots have been telecast and setting forth the
aggregate value of Advertiser's Spots telecast by NBC in the preceding month.
4. Representations and Warranties. NBC and Advertiser each represent and warrant
that this Letter Agreement has been duly authorized, executed and delivered by
such party and that this Letter Agreement constitutes the legal, valid and
binding obligations of such party, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally or by general principles of
equity.
5. Termination. (a) Notwithstanding any other remedy available to NBC, in the
event that:
(i) NBC notifies Advertiser in writing (with specificity) that
Advertiser has
<PAGE> 3
3
materially breached this Letter Agreement and Advertiser has not cured
such alleged breach within thirty (30) days of its receipt of such
notice; or
(ii) upon the occurrence of a Change of Control (as
hereinafter defined); or
(iii) Advertiser admits in writing its inability to pay its
debts generally; makes a general assignment for the benefit of
creditors; has any proceeding instituted by or against it seeking to
adjudicate it as bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or
composition of Advertiser or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a
receiver, trustee, or similar official for it or any substantial part
of its property; provided, in the case where such proceeding is
involuntarily instituted against Advertiser, such proceeding remains
undismissed after thirty (30) days,
then, in any such case, NBC shall have the right, but not the obligation, to
terminate this Letter Agreement, without prejudice to the rights of the parties
hereunder and, in the event of a termination after NBC's receipt of the Shares
pursuant to Section 3(a) hereof, NBC shall pay Advertiser a cash amount equal to
the difference, if positive, between the Total Spot Value and the value of the
Spots already telecast (or deemed telecast), as determined and calculated
pursuant to Sections 1 and 2 above. Notwithstanding the foregoing, the terms
contained in Sections 5, 6, 7 and 8 shall survive the termination hereof. Any
such termination right in connection with a Change of Control shall be
exercisable no later than the later to occur of (x) ten (10) business days prior
to the consummation of such Change of Control and (y) ten (10) business days
after receipt by NBC of notice (which notice shall identify the third party
having or acquiring Control over Advertiser, be in writing, explicitly state
that it is being delivered in accordance with this Section 5 and provide NBC
with such additional information as has been provided to the other stockholders
of Advertiser) from Advertiser of such Change of Control (which termination
shall become effective, at NBC's discretion, upon the consummation of such
Change of Control or following receipt of such notice from Advertiser). For
purposes of this Section 5, the following terms shall have the following
meanings:
"Change of Control" shall mean (A) any consolidation,
reorganization or merger of Advertiser with any third party, other than
a transaction resulting in the holders of the capital stock of
Advertiser (prior to such consolidation, reorganization or merger)
having Control over the surviving or resulting entity, (B) any third
party (other than NBC) having Control over Advertiser or (C) any sale,
transfer or other disposition by Advertiser of all or substantially all
of its assets to any third party (other than NBC); and
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of Advertiser, whether through ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise.
<PAGE> 4
4
(b) Notwithstanding any other remedy available to Advertiser, in the
event that:
(i) Advertiser notifies NBC in writing (with specificity) that NBC has
materially breached this Letter Agreement and NBC has not cured such alleged
breach within thirty (30) days of its receipt of such notice; or
(ii) NBC admits in writing its inability to pay its debts generally; makes a
general assignment for the benefit of creditors; has any proceeding instituted
by or against it seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of NBC or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or similar official
for it or any substantial part of its property; provided, in the case where such
proceeding is involuntarily instituted against NBC, such proceeding remains
undismissed after thirty (30) days,
then, in any such case, Advertiser shall have the right, but not the obligation,
to terminate this Letter Agreement, without prejudice to the rights of the
parties hereunder and, in the event of a termination after NBC's receipt of the
Shares pursuant to Section 3(a) hereof, require NBC to pay Advertiser a cash
amount equal to the difference, if positive, between the Total Spot Value and
the value of the Spots already telecast (or deemed telecast), as determined and
calculated pursuant to Sections 1 and 2 above. Notwithstanding the foregoing,
the terms contained in Sections 5, 6, 7 and 8 shall survive the termination
hereof.
6. Miscellaneous. This Letter Agreement, the Stock Purchase Agreement and the
exhibits and schedules hereto and thereto constitute the entire agreement and
understanding of the parties relating to the subject matter hereof and supersede
all prior and contemporaneous agreements, negotiations, and understandings
between the parties, both oral and written relating thereto. No waiver or
modification of any provision of this Letter Agreement shall be effective unless
in writing and signed by both parties. The terms of this Letter Agreement shall
apply to parties hereto and any of their successors or assigns; provided,
however, that this Letter Agreement may not be transferred or assigned by
Advertiser, including, without limitation, the right to receive Spots to be
telecast by NBC TV, without the prior written consent of NBC. This Letter
Agreement may be executed in counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
7. Governing Law and Jurisdiction. This Letter Agreement shall be governed by
and construed under the laws of the State of New York applicable to contracts
fully performed in New York, without regard to New York conflicts law. The
parties hereto irrevocably consent to and submit to the exclusive jurisdiction
of the federal and state courts located in the County of New York. The parties
hereto irrevocably waive any and all rights to trial by jury in any proceeding
arising out of or relating to this Agreement.
<PAGE> 5
5
8. Liability for Failure to Broadcast Spots. In the event that NBC does not
telecast Spots equal to the Total Spot Value during the twenty-four (24) months
after the Effective Date, then as liquidated damages and not a penalty, NBC
shall pay Advertiser in cash an amount equal to the difference, if positive,
between the Total Spot Value and the value of the Spots actually telecast, as
calculated pursuant to Section 2 above. Except for damages arising out of the
gross negligence of willful misconduct of either party hereto, no party shall be
liable to the other party or its affiliates, officers, directors, successors or
assigns for any incidental, consequential, special or punitive damages or lost
profits arising out of this Letter Agreement, whether liability is asserted in
contract or tort and irrespective of whether it has advised or been advised of
the possibility of any such loss or damage.
If you are in agreement with the above terms and conditions, please
indicate your acceptance by signing in the space provided below, and return one
original to me. This Letter Agreement shall be null and void if not signed
within two (2) days of the date set forth above.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ Margaret T. Murphy
_______________________
Name: Margaret T. Murphy
Title: Vice President
ACCEPTED AND AGREED:
INTELLIGENT INFORMATION INCORPORATED
By: /s/ Stephen G. Maloney
______________________
Name: Stephen G. Maloney
Title: President Chief Executive Officer
[SIGNATURE PAGE TO INTELLIGENT INFORMATION ADVERTISING AGREEMENT]
<PAGE> 6
6
<PAGE> 1
Exhibit 10.17
NBC Interactive Media, Inc.
30 Rockefeller Plaza
New York, New York 10112
December 29, 1999
Mr. Steve Maloney
President & CEO
Intelligent Information Incorporated
181 Harbor Drive, 3rd Fl.
Stamford, CT 06902
Dear Steve:
As you know, we at NBC Interactive Media ("NBC") are excited about
working with Intelligent Information Incorporated ("III") regarding a wireless
distribution deal for certain of our interactive properties. Pending the
execution of one or more definitive distribution agreements (each, a
"Distribution Agreement") and certain other documentation as more fully
described below, this letter agreement will confirm our discussions regarding
our relationship as follows:
1. Distribution. (a) III shall make wireless distribution services available to
NBC and its affiliates (including, for example, NBC Internet, Inc., MSNBC
Interactive News LLC and CNBC.com LLC) (each, an "NBC Entity") for use in
connection with their interactive content offerings. III shall provide each NBC
Entity with a Distribution Agreement with terms and conditions, including
marketing fee allocations and distribution and performance metrics, no less
favorable to such NBC Entity than those provided to any other customer of III
contracting for a similar volume of services.
(b) Following execution of any Distribution Agreement, to the extent
III offers a lower price or a more favorable marketing fee allocation to any
customer contracting for a similar volume of services, such lower price shall
automatically be applied on a going forward basis to each of the Distribution
Agreements. At any time during the term of the Distribution Agreements, an NBC
Entity may request, and III shall promptly provide, an officer's certificate
certifying that III has been and remains in compliance with this Section.
2. Preferred Placement: Each Distribution Agreement shall provide, to the extent
technically feasible within the III wireless services, Preferred Placement (as
defined below) for NBC's interactive properties and affiliates with respect to
the type of content distributed pursuant to such Distribution Agreement (for
example, a Distribution Agreement for MSNBC.com would provide Preferred
Placement for MSNBC in the news category); provided that III shall not be
required to provide such Preferred Placement if exclusivity or Preferred
Placement for such type of content has been provided, prior to the execution of
the Distribution Agreement, to a third party not affiliated with III. Preferred
Placement shall mean (a) 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 or 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.
<PAGE> 2
3. Promotion: (a) III will make five percent (5%) of its unused inventory of
wireless advertising taglines available to the interactive properties of the NBC
Entities following execution of any Distribution Agreement; provided that if
more than one NBC Entity enters into a Distribution Agreement, the first two NBC
Entities that enter into Distribution Agreements with III shall allocate such
unused inventory equally between them. The value of this inventory for purpose
of this Agreement shall be calculated at the III rate card for run of service
taglines in effect at the time such taglines are ordered.
(b) The taglines shall promote the products and services of NBC 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
III. In addition, with respect to the placement or delivery of such taglines on
any particular wireless network, III may reject such taglines if they would
compete with or violate the rights of any other advertiser, sponsor or III
distribution partner, as determined by III in its sole discretion and in good
faith.
(c) III will provide marketing funds at a mutually agreed upon level to
NBC and the NBC Entities in support of the joint wireless initiatives of III and
the NBC Entities, but in no event shall the amount of marketing funds provided
to NBC and the NBC Entities be less than the value of the advertising taglines
provided to NBC and the NBC Entities. These funds will be used in support of
marketing activities at the discretion of the parties.
4. Warrants. (a) Upon execution of each Distribution Agreement by III and NBC
Entity, III will grant to NBC for distribution to itself or, pursuant to NBC's
instructions, in whole or in part, to such NBC Entity, a fully-vested warrant
(each, a "Warrant") to purchase up to 20,000 shares of III's Common Stock at an
exercise price equal to $10.00 per share. In the event the first Distribution
Agreement is executed on or before March 31, 2000, the Warrant granted in
consideration therefore shall be for 30,000 shares (the "Bonus Shares"). The
aggregate number of shares available hereunder, including the Bonus Shares,
shall not exceed 110,000 shares. NBC shall use its commercially reasonable
efforts to cause the NBC Entities to enter into Distribution Agreements with
III.
(b) Each Warrant shall expire three (3) years following its issuance
and shall not terminate upon an initial public offering or change of control of
III. Subject to any relevant securities laws, rules and regulations, each
Warrant, as well as the equity acquired through exercise thereof, will be freely
transferable by NBC or such NBC Entity and may be exercised in whole or in part.
When exercising any Warrant, NBC or such NBC Entity shall have the right to
either (i) purchase the total number of shares of equity which such Warrant
entitles NBC or such NBC Entity to purchase at the exercise price described
above or (ii) receive the net number of shares of equity arising from the
difference between the market price of such equity at the date of exercise and
the exercise price for the Warrant.
5. Public Relations. Each party will issue a press release announcing the
relationship between the parties, with each such press release subject to the
approval of the other party. NBC will provide a reasonable level of public
relations resources to promote the strategic alliance between of III and NBC.
6. Term. The term of this Letter Agreement shall be two (2) years and, during
such period, each NBC Entity shall have the right to enter into a Distribution
Agreement with a term of up to three (3) years, with each such term commencing
upon the execution of each such Distribution Agreement.
<PAGE> 3
It is expressly understood that this Letter Agreement constitutes a
binding obligation on the parties. This Letter Agreement shall be governed by
and construed under the laws of the State of New York applicable to contracts
fully performed in New York, without regard to New York conflicts law. This
Letter Agreement may be executed in counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement
If you are in agreement with the above terms and conditions, please
indicate your acceptance by signing in the space provided below, and return one
original to me. This Letter Agreement shall be null and void if not signed
within two (2) days of the date set forth above.
Sincerely,
NBC Interactive Media, Inc.
/s/ Margaret T. Murphy
----------------------
Margaret T. Murphy
Vice President
Acknowledged and agreed:
Intelligent Information Incorporated
/s/ Stephen G. Maloney
- ----------------------
Stephen G. Maloney
President & CEO
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES
Quotes Plus . . . , Inc.
<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 December 10, 1999 relating to the financial statements and the
financial statement schedule of Intelligent Information Incorporated, 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
January 7, 1999
<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 NINE MONTHS ENDED SEPTEMBER 30, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 4,000
<SECURITIES> 0
<RECEIVABLES> 100
<ALLOWANCES> 217
<INVENTORY> 0
<CURRENT-ASSETS> 4,650
<PP&E> 281
<DEPRECIATION> 84
<TOTAL-ASSETS> 5,442
<CURRENT-LIABILITIES> 1,281
<BONDS> 0
16,134
0
<COMMON> 76
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,442
<SALES> 1,325
<TOTAL-REVENUES> 1,325
<CGS> 673
<TOTAL-COSTS> 673
<OTHER-EXPENSES> 4,534
<LOSS-PROVISION> 131
<INTEREST-EXPENSE> 290
<INCOME-PRETAX> (4,172)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,172)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,527)
<EPS-BASIC> (1.60)
<EPS-DILUTED> (1.60)
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