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EXHIBIT 10.34
[i3 MOBILE LOGO]
March 30, 2000
Xx. Xxxx Xxxxxxx
Vice President Corporate Business Development
XX.xxx
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Re: i3 Mobile, Inc. - Letter of Intent
Dear Xxxx:
This letter sets forth a proposal to pursue further negotiations and discussions
leading to a definitive agreement between XX.Xxx ("XX.Xxx") and i3 Mobile, Inc.
("i3 Mobile"). The proposed arrangement will require further documentation and
approvals, including the preparation and approval of a definitive agreement
setting forth the terms and conditions of the business relationship (the
"Agreement"). Nevertheless, i3 Mobile and XX.xxx, by signing below, execute this
letter to evidence their intentions to proceed in mutual good faith to complete
the work required to negotiate the Agreement on terms that are consistent with
this letter.
In our view, i3 Mobile is uniquely positioned to work with XX.xxx to develop the
value of XX.xxx wireless information and product offerings. The proposed terms
and conditions include, but are not limited to, the following:
1. LICENSE GRANT: During the term of the Agreement, i3 Mobile will provide
Short Messaging Service ("SMS") integration services, including content
delivery, wireless advertising and M-commerce transactions, to XX.xxx's
affiliated web sites that consist of, for purposes of the Agreement,
XXXX.XXX, XX.XXX, and XXXXXXX.XXX ("GO Network Partners"). XX.xxx will not
use any other third party to provide SMS integration services for delivery
of content, wireless advertising or wireless e-commerce transactions for
any of its GO Network Partners nor to AT&T, SBC Communications, or AirTouch
Vodafone. i3 Mobile will be authorized to extend the ESPN and ABC NEWS
brand names and logos to existing and/or future business partners of either
ESPN, ABC NEWS or i3 Mobile. Additionally, i3 Mobile shall have the right
of first negotiation for all other wireless platforms, other than WAP, to
be used by XX.xxx and the GO Network Partners.
2. TERM: The term of the Agreement shall be two (2) years beginning on the
Effective Date and will automatically renew for a third year unless XX.xxx
provides i3 Mobile with written notice of its intention to not renew the
Agreement at least 90 days prior to the second anniversary of the Effective
Date. The Effective Date of the Agreement shall be either (a) the date the
Agreement is fully signed by the parties; or (b) the date of the first
wireless service launch contemplated hereunder, whichever is later provided
that any delay is not caused by i3. The parties agree to translate the
terms of this letter into the Agreement within 30 days of the signing of
this letter.
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3. GEOGRAPHIC SCOPE: This agreement shall cover all U.S territory covered by
Xx.xxx and the GO Network Partners and other mutually agreed upon
territories.
4. DEVELOPMENT FEE: Immediately upon execution of the Agreement, i3 Mobile
shall work with XX.xxx and the GO Network Partners to develop
specifications to enable the GO Network Partners to deliver customizable
content, data and transactional services to their customers wireless
devices. XX.xxx shall pay i3 Mobile the base sum of $150,000 for the
development of these three (3) web sites. The $150,000 payment shall
include the following services:
- Technical design, development, testing and implementation of the
wireless portal (including all provisioning pages).
- i3 Mobile Wireless Customer Care and on-line provisioning Set-Up
- In-house training of staff relating to customer service procedures and
policies
- FAQ (Frequently Asked Questions) online document
- Second level customer support including access to i3 Mobile staff on a
24/7 basis.
Costs for additional development services for these web sites or
development of additional affiliated XX.xxx web sites will be mutually
agreed upon by the parties at such time.
5. PAYMENTS BY i3: In consideration of the rights granted by XX.xxx to i3
Mobile in Paragraph 1, i3 Mobile agrees to pay XX.xxx as follows: $350,000
upon the Effective Date and an additional $400,000 on the first anniversary
of the Effective Date of this Agreement. Unless terminated pursuant to
paragraph 2, above, i3 Mobile agrees to pay XX.xxx $450,000 on the third
anniversary of the Effective Date of this Agreement.
6. WARRANTS: In consideration of the rights granted by XX.xxx to i3 Mobile in
Paragraph 1, i3 Mobile shall issue to XX.xxx warrants (the "Warrant") to
purchase up to 40,000 shares of i3's Common Stock at an exercise price
equal to fifteen ($15.00) dollars per share. The Warrant shall vest (a) 13,
333 upon the launch of the first wireless GO Network Partner web site (b)
13,333 upon the first anniversary of the Effective Date and, if no notice
of termination has been given per Paragraph 1, (c) 13,334 upon the second
anniversary of the Effective Date, and shall expire three (3) years
following issuance and shall not terminate upon an initial public offering
or change of control of the Company. Subject to any relevant securities
laws, rules and regulations, the Warrant, as well as the Common Stock
acquired through exercise thereof, will be freely transferable by XX.xxx
and may be exercised in whole or in part. When exercising the Warrant,
XX.xxx shall have the right to either (a) purchase the total number of
shares of Common Stock which such Warrant entitles XX.xxx to purchase at
the exercise price described above or (b) receive the net number of shares
of Common Stock arising from the difference between the market price of
such Common Stock at the date of exercise and the exercise price of the
Warrant. Prior to the grant of the Warrant hereunder, i3 will provide
XX.xxx with an opportunity to review i3's standard Warrant form prior to
execution.
7. MARKETING FUNDS: i3 Mobile shall contribute $75,000 during the first six
(6) months of this Agreement. These funds will be used to purchase
advertising on the ESPN and/or XXXXXXX.xxx web sites at mutually agreed
upon CPMs in order to promote participation and increase awareness of the
wireless portal products in accordance with a marketing plan and the funds
will be released in accordance with this plan.
8. MONTHLY DATABASE/PROFILE MANAGEMENT FEE: Starting with the Effective Date
of the Agreement, i3 Mobile shall charge a monthly fee based on the total
number of users of the GO Network Partners according to the schedule
outlined below. These charges are to cover i3 Mobile's costs of database
infrastructure and maintenance, communication, file management, etc.:
< 10,000 subscribers - $4000 per month
10k - 25k subscribers - $0.30 per subscriber per month
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25k - 50k subscribers - $0.25 per subscriber per month
50k + subscribers - $0.15 per subscriber per month.
9. CONTENT LICENSING: During the term of the Agreement, i3 Mobile shall have
the right to distribute content belonging to the GO Network Partners to
create additional wireless products which may be branded with a GO brand or
privately labeled by a wireless network operator and, in each instance,
will be approved by XX.xxx in advance (including the financial terms of
such distribution). It is also agreed that i3 Mobile will pay XX.xxx a fee
for the licensing of XX.xxx content. These fees shall be mutually agreed
upon by the parties in each instance.
10. ADVERTISING/E-COMMERCE REVENUE: XX.xxx and i3 Mobile will share equally any
advertising revenues (net of any third party advertising sales commissions,
if any) and profit derived from mobile e-commerce transactions on the GO
Network Partners sites (less any third party revenue sharing). XX.xxx and
i3 will mutually agree upon the level of services to be provided.
11. SUBSCRIPTION SERVICES: XX.xxx and i3 Mobile shall equally share all
subscription revenues, net of management fees paid to i3 Mobile pursuant to
paragraph 8. The parties shall mutually agree upon the retail cost of all
subscription services.
12. XX.XXX OBLIGATIONS: Xx.xxx will use its best commercially reasonable
efforts to promote and advertise the wireless portal services, i.e. Fantasy
League, XXXX.xxx, XXXXXXX.xxx, and Xx.xxx etc. to encourage subscription
growth through various media sources. Each GO Network Partner that offers
wireless services will promote their wireless services on the home page of
each site and shall hot link to a portal page offering all wireless
services including the SMS Services.
13. XX.XXX RIGHT OF FIRST REFUSAL: i3 Mobile will grant to XX.xxx the right of
first refusal to provide content to any distribution arrangement entered
into by i3 Mobile with a North American wireless network operator any time
during the Term of this Agreement. In the event that i3 Mobile reasonably
believes that it will need to provide content to a carrier that is subject
to this provision and is under no pre-existing contractual obligation,
entered into prior to the date of this letter, to the contrary, i3 Mobile
shall provide XX.xxx with a right to present an offer ("Offer") to i3
Mobile to provide content necessary for such service prior to i3 Mobile's
search for any other content provider. The written notice to exercise the
right to present an Offer must be received by i3 Mobile within five (5)
business days of XX.xxx's receipt of the initial notice hereunder. In the
event the parties do not reach agreement as of the end of such period, the
Company shall be permitted to enter into an agreement with another content
provider.
14. i3 MOBILE RIGHT OF FIRST REFUSAL: XX.xxx will grant to i3 Mobile the right
of first refusal to provide XX.xxx and the GO Network Partners enhanced SMS
Services (such as text to voice) for any of the wireless sites enabled
hereunder.
This transaction is subject to the negotiation and execution of the Agreement
with terms satisfactory to i3 and XX.xxx. No press release or other announcement
concerning the proposed transaction will be issued except by the mutual written
consent of the parties and except as may be required by applicable securities
laws in connection with i3 Mobile's initial public offering. This letter and all
negotiations and discussions between the parties shall be strictly confidential
and will not be disclosed in any manner except to employees and agents of the
parties on a need to know basis.
Each of the parties will use its best efforts to complete and execute the
Agreement on or before April 15, 2000. This letter sets forth the intent of the
parties only, is not binding on the parties and may not be relied on as the
basis for a contract or be the basis for a claim based on detrimental reliance
or any other theory; provided that the confidentiality provisions are
enforceable in accordance with their terms. The parties understand that no party
shall be bound until the Agreement has been negotiated, executed and delivered.
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This letter may be terminated at any time by either party giving written notice
to the other. This letter will terminate automatically on April 15, 2000 if the
Agreement has not been executed by that date. If this letter accurately reflects
your understanding of our agreement, then kindly countersign and return the
enclosed copy of this letter to my attention.
Sincerely,
i3 Mobile, Inc.
/s/ Xxxxx X. Xxxxxxx
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National Account Manager
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ACCEPTED AND AGREED TO:
XX.xxx, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
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Executive Vice President
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Exhibit I
(see attached Spreadsheets)
