Confidential Information omitted where indicated by "[*]" and filed separately
with the Commission pursuant to a request for confidential treatment under
Rule 24b-2 of the Securities Exchange Act of 1934.
EXHIBIT 10.17A
i3 MOBILE, INC.
181 HARBOR DRIVE
STAMFORD, CONNECTICUT 06902
November 7, 2001
Mr. Errol Gerson
Chief Executive Officer
iNetNow, Inc.
4322 Wilshire Boulevard
Second Floor
Los Angeles, California 90010
Re: Agreement between i3 Mobile, Inc. and
iNetNow, Inc. dated as of October 1, 2001
Dear Errol:
This letter sets forth the agreement between i3 Mobile, Inc. ("i3
Mobile") and iNetNow, Inc. ("iNetNow") pursuant to which the Agreement between
us dated as of October 1, 2001 (the "Agreement") shall be amended as follows:
1. Section 1.6 of the Agreement is hereby deleted and replaced in its
entirety with the following:
"1.6 Purchase of Calls and Provisioning for Calls. i3 Mobile shall
purchase Mobile Concierge Services and "fail over call" services from
iNetNow. iNetNow shall provision its resources to allow it to answer
that number of calls for and on behalf of i3 Mobile as shall be
requested by i3 Mobile."
2. New Sections 1.7, 1.8 and 1.9 are hereby added to the Agreement and
shall read in their entirety as follows:
"1.7 Funding of iNetNow Overhead.
(a) i3 Mobile shall be responsible on a monthly basis during the
Term of this Agreement for paying directly, or providing
iNetNow with earmarked funds for the payment of, the following
items [*] at i3 discretion, by i3 Mobile on behalf of iNetNow
(the "Expense Payment"):
Confidential Information omitted where indicated by "[*]" and filed separately
with the Commission pursuant to a request for confidential treatment under
Rule 24b-2 of the Securities Exchange Act of 1934.
(i) [*] of the salaries and benefits of such iNetNow call
center personnel, information technology personnel, director
of human resources and controller as are wholly dedicated to
the i3 Mobile Service (the "i3 Mobile-Dedicated Personnel").
Exhibit 1.7a annexed hereto contains a list of the i3
Mobile-Dedicated Personnel as of the date hereof, together
with their current salaries and benefits. iNetNow shall
provide i3 Mobile with a new Exhibit 1.7a at the beginning
of each month during the Term reflecting an updated list of
the i3 Mobile-Dedicated Personnel;
(ii) [*] of the current rent on iNetNow's premises, it being
agreed that no portion of such payment from i3 Mobile shall be
for any past due rent as of the date hereof or for any rent
increases resulting from any future renegotiation of the lease
terms with iNetNow's landlord; and
(iii) Such additional non-payroll and non-rent costs of iNetNow
for the period from the date hereof through April 30, 2002 as
reflected on a budget/analysis acceptable to i3 Mobile (the
"Budget"), with such additions or deletions as may be mutually
agreed between i3 Mobile and iNetNow from time to time after the
delivery of the Budget and with a pro rata reduction of the
Budget in the event that the i3 Mobile Service at any time
constitutes less than ninety percent (90%) of iNetNow's actual
call volume.
(b) Amounts of the Expense Payment attributable to payroll for the i3
Mobile-Dedicated Personnel of iNetNow shall be paid directly to
iNetNow's payroll account, and iNetNow shall make all of its
payroll records, including payroll registers, available to i3
Mobile in order for i3 Mobile to confirm that such amounts of
Expense Payment have been used solely for the i3 Mobile-Dedicated
Personnel. iNetNow agrees that, during the Term, it will not make
any change in the compensation or benefits of the i3
Mobile-Dedicated Personnel without the prior written consent of
i3 Mobile. iNetNow further agrees that i3 Mobile shall be
permitted free and unfettered access to the premises, personnel
and books and records of iNetNow during the Term, including the
placement of i3 Mobile personnel on site, in order to ensure
continuity of the i3 Mobile Service.
(c) Amounts of the Expense Payment attributable to costs other than
payroll shall be paid directly to iNetNow's operating account.
iNetNow shall provide i3 Mobile with the Budget contemporaneously
with the execution of this letter and with its proposed accounts
payable register, including the name, address and telephone
number of each payee, the nature of the service performed or
product sold by the payee and the amount due, and its check
register at the beginning of each month during the Term in order
for i3 Mobile to confirm that such amounts
Confidential Information omitted where indicated by "[*]" and filed separately
with the Commission pursuant to a request for confidential treatment under
Rule 24b-2 of the Securities Exchange Act of 1934.
of Expense Payment have been used for payment of costs contained
in the Budget. From time to time during the Term, iNetNow shall
provide such additional detail regarding its accounts payable as
i3 Mobile may reasonably request.
"1.8 Calculation and Payment of Fees for i3 Mobile Service. During each
month of the Term, iNetNow shall calculate the fee due to iNetNow based on
[*] provided by iNetNow for the i3 Mobile Service during the preceding
month in accordance with the schedule set forth on Exhibit 1.8a annexed
hereto (the "Fee"). In the event that the Fee for such month exceeds the
Expense Payment for such month, i3 Mobile shall pay iNetNow an amount equal
to [*] of such excess, and the balance of such excess shall be retained by
i3 Mobile and applied to any outstanding indebtedness then due and owing
from iNetNow to i3 Mobile. In the event that there is no such outstanding
indebtedness, the amount paid to iNetNow shall increase to [*] of such
excess, and the balance of such excess shall be retained by i3 Mobile. In
the event that the Fee for any month is less than the Expense Payment for
such month, the difference shall constitute an additional advance under the
Senior Secured Promissory Note dated October 17, 2001 between iNetNow and
i3 Mobile and shall increase the outstanding indebtedness of iNetNow to i3
Mobile."
3. Section 6 of the Agreement is hereby deleted and replaced in its
entirety with the following:
"6. Term. The term ("Term") of this Agreement shall commence on the
Effective Date and terminate on April 30, 2002 unless terminated sooner in
accordance with the terms of this Agreement. The Term shall thereafter be
extended on a month to month basis through October 31, 2002 unless
terminated sooner in accordance with the terms of this Agreement."
4. Section 13.1 of the Agreement is hereby amended by adding the following
at the end of such section:
"In addition to i3 Mobile's right of termination under this Section 13.1 in
the event that iNetNow becomes involved, either voluntarily or
involuntarily, in a bankruptcy or related proceeding (the "Proceeding"), i3
Mobile shall have the right, subject to the approval of the Bankruptcy
Court responsible for the Proceeding (the "Bankruptcy Court"), to assume
the management of the business of iNetNow in order to preserve the
continuity of the i3 Mobile Service. iNetNow agrees to take all such
actions as may be required to enable i3 Mobile to assume management of the
business of iNetNow for such purpose during the pendency of the Proceeding,
subject to the discharge of its fiduciary duties."
5. Section 13.2 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"13.2 By i3 Mobile. i3 Mobile may terminate this Agreement for any or
no reason at the end of the initial Term upon thirty (30) days prior
written notice to iNetNow and at any time thereafter upon thirty (30)
days prior written notice to iNetNow."
6. Section 13.3 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"13.3 By iNetNow. If i3 Mobile fails to pay to iNetNow any undisputed
amount due iNetNow under this Agreement when such amount is due,
iNetNow may terminate this Agreement ten (10) business days after i3
Mobile's receipt of iNetNow's written notice of intent to terminate for
nonpayment, provided that full payment of the undisputed amount is not
received by iNetNow within said grace period."
7. The fourth sentence of Paragraph 1) of Exhibit 1.1a annexed to the
Agreement ("Exhibit 1.1a") is hereby amended by replacing the words "Exhibit
1.6a" with the words "Exhibit 1.8a."
8. Paragraph 2) of Exhibit 1.1a is hereby deleted and replaced in its
entirety by the following:
"2) Live operator backup and Mobile Concierge may be offered in the
market by i3 Mobile as a single, combined product or as separate
products. iNetNow will provide the services required herein from the
Effective Date hereof until the end of the Term, including any month to
month extension thereof."
9. Paragraph 3) of Exhibit 1.1a is hereby deleted, paragraph 4) is
renumbered paragraph 3) and a new paragraph 4) is added to read in its entirety
as follows:
"4) i3 Mobile will calculate the Fee for the i3 Mobile Service
according to Exhibit 1.8a. Both parties agree to work together in good
faith to manage the average call length for i3 Mobile Services in a
cost effective manner."
10. Paragraphs 5) through 8) of Exhibit 1.1a are hereby deleted, and a new
paragraph 5) is added to read in its entirety as follows:
"5) i3 Mobile agrees to provide iNetNow with a call volume forecast on
a monthly basis, beginning on the date of commercial launch of the i3
Mobile Service, in order to assist both parties in handling the hiring
and training of iNetNow resources in the most cost-effective manner and
to effectively manage related expenses for i3 Mobile."
11. Paragraphs 9) through 13) of Exhibit 1.1a are renumbered paragraphs 6)
through 10), paragraphs 14) and 15) are hereby deleted and paragraphs 16) and
17) are hereby renumbered paragraphs 11) and 12).
12. Exhibit 1.6a annexed to the Agreement is hereby renumbered Exhibit
1.8a.
In addition to the foregoing amendments to the Agreement, in
consideration of i3 Mobile's past and future financial accommodations to
iNetNow, iNetNow agrees as follows:
1. iNetNow shall not grant a license to its software to anyone other
than i3 Mobile for use in the United States and its territories and possessions
during the Term of the Agreement but shall be entitled to continue to render
services to its current customer base and to seek and secure new customers,
provided that (a) such activity does not adversely affect iNetNow's ability to
provide the i3 Mobile Service and (b) iNetNow does not use the services of any
i3 Mobile-Dedicated Personnel in such activity.
2. Prior to November 30, 2001, iNetNow and i3 Mobile shall enter into
an agreement with a recognized software depository which shall provide, inter
alia, for iNetNow to deposit the source code for its software into escrow with
such third party escrow agent subject to release to i3 Mobile in the event of
any breach by iNetNow of its obligations under the Agreement, as amended and
supplemented by this letter, or the occurrence of any Proceeding. The escrow
agreement shall also provide i3 Mobile with the ability prior to such escrow
deposit to confirm that the material so deposited in fact constitutes the
complete source code for iNetNow's software.
3. iNetNow shall pay all payroll taxes currently in arrears no later
than December 31, 2001 and shall pay all other future payroll taxes on a current
basis during the Term. iNetNow shall provide i3 Mobile with documentation
indicating the current status of iNetNow's payroll tax arrearages and all
payments made in connection therewith. Prior to November 30, 2001, iNetNow shall
resolve all outstanding issues with its landlord relating to outstanding amounts
due to such landlord and shall provide i3 Mobile with evidence that iNetNow is
no longer in default under the terms of the lease of its premises. iNetNow shall
use its best efforts to reduce the amount of space leased from the landlord,
either by giving back such space to the landlord or concluding a sublease with a
third party, and i3 Mobile's obligation under Section 1.7(a)(ii) of the
Agreement, as amended, shall be reduced accordingly. iNetNow shall confer with
i3 Mobile prior to making any such space reductions or subleases. In any event,
iNetNow shall make all future rent and related payments to the landlord on a
current basis so as to prevent any future defaults in its obligations with
respect to its premises.
4. In the event that iNetNow receives a bona fide third party offer to
acquire all or substantially all of the business or assets of iNetNow, i3 Mobile
shall have the right of first refusal, exercisable within ten (10) business days
of iNetNow's receipt of such offer, to match any such offer and acquire the
business or assets of iNetNow.
5. Attached hereto is a proposal for the licensing by i3 Mobile of
iNetNow's software during the Term. If during the Term, iNetNow licenses its
software to any third party at prices or terms and conditions that are more
favorable to the prices or terms and conditions provided to i3 Mobile, then
iNetNow shall pay to i3 Mobile an amount equal to the difference between the
amount paid by i3 Mobile for such software and such more favorable prices and i3
Mobile shall also be entitled to the same more favorable terms and conditions
If the foregoing accurately reflects our agreement, please so indicate
by signing a copy of this letter below and returning it to the undersigned, at
which point this letter shall constitute a legally binding agreement between us.
Sincerely,
i3 MOBILE, INC.
By: /s/ John A. Lack
----------------
John A. Lack
Chief Executive Officer
ACCEPTED AND AGREED TO:
iNETNOW, INC.
By: /s/ Errol Gerson
---------------------------
Errol Gerson
Chief Executive Officer