EXHIBIT 10.3
ROYALTY AGREEMENT
THIS ROYALTY AGREEMENT (the "Agreement") dated as of March 13th, 2006
is made by and between EdgeTech Inc., a Florida corporation ("Edgetech"), having
a business address at 0000 XX 0xx Xxxxxx, Xxxxx 0, Xxxx Xxxxx, Xxxxxxx 000000,
and Xxxxxxxxx & Xxxxxxx Group, LLC, a Florida limited liability company (the
"Company"), having an address at 000 Xxxxx Xxxxxxx Xxxxxxx, Xxxx Xxxxx, Xxxxxxx
00000 (the signatories to this Agreement are referred to individually herein as
a "Party" and collectively herein as "Parties" ).
WITNESSETH:
WHEREAS, Edgetech has certain exclusive rights granted to it by and
pursuant to a written agreement with Datawind Net Access Corporation, a Delaware
corporation ("Datawind") (the "Datawind Agreement") to market, distribute, sell
and cause to have manufactured, the Products, as such term is defined below, on
a worldwide basis, within five (5) vertical markets: (i) fantasy sports and
sports book; (ii) online poker; (iii) music; movie and television; (iv) adult
markets (adult rated content); and (v) financial services market (certain
exclusions apply to vertical markets (iv) and (v); and
WHEREAS, Edgetech desires to pay the Company royalties on the monthly
service fees Edgetech charges and receives on the Products, as such term is
defined below;
NOW, THEREFORE, for and in consideration of the covenants, conditions
and undertaking hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which is acknowledged by each of
the Parties hereto, it is agreed by and between the Parties as follows:
1. DEFINITIONS
--------------
1.1 "Products" as used herein means the current generation, next
generation (with improved industrial design, embedded GPRS modem, backlit
keyboard, offline organizer, and GPS functionality) and any subsequent
generations, including but not limited to improvements and/or modifications
caused by Edgetech, of the PocketSurfer, a handheld wireless internet access
device the intellectual property rights to which are currently owned by Datawind
and/or affiliates thereof.
1.2 "Gross Receipts" as used herein, means the gross receipts and all
other money and compensation of whatever kind received by Edgetech (and/or any
other entity associated and/or affiliated with Edgetech) (collectively,
"Edgetech") as a monthly service fee from each user and/or reseller of the
Products, less any applicable sales taxes.
2. EARNED RUNNING ROYALTIES
---------------------------
2.1 Edgetech shall pay the Company an earned running royalty of 2.5% on
the Gross Receipts commencing with the first sale of the Products from the date
first set forth above.
2.2 Earned running royalties under Paragraph 2.1 shall accrue to the
Company for so long as Edgetech has any customers utilizing the Products from
which Edgetech derives any Gross Receipts.
2.3 Earned running royalties accruing to the Company shall be paid by
Edgetech on a monthly basis within ten (10) days after the end of the previous
calendar month in which Gross Receipts are received by Edgetech.
1
3. DUE DILIGENCE
----------------
3.1 Edgetech, upon execution of this Agreement, shall diligently
proceed to market, distribute, sell, charge and collect Gross Receipts to the
best of its ability.
3.2 Edgetech shall be entitled to exercise prudent and justifiable
business judgment in meeting its due diligence obligations hereunder.
4. REPORTS, BOOKS AND RECORDS
-----------------------------
4.1 At the end of each calendar quarter (three month) accounting period
after the first three royalty-bearing Gross Receipts months for the Products,
Edgetech shall provide the Company a written report prepared in the ordinary
course of its business and in accordance with U.S. generally accepted accounting
principles, showing all sales of the Products and Gross Receipts received by
Edgetech during the preceding three (3) month accounting period. Reports are due
within ten (10) days from the end of each calendar quarter for the preceding
three (3) month period. If no sales of Products have been made and/or Gross
Receipts received during any reporting period, a written statement to this
effect from Edgetech shall be required. All such reports shall be treated by the
Company as business proprietary information of Edgetech.
4.2 Edgetech shall keep books and records according to U.S. generally
accepted accounting standards and procedures accurately showing all sales of the
Products by Edgetech and all Gross Receipts received by Edgetech under the terms
of this Agreement. Such books and records shall be open to inspection during
reasonable business hours on a confidential basis by representatives or agents
of the Company at reasonable times, but in no event more than four times each
year, for the purpose of verifying the accuracy of the quarterly reports and the
royalties due hereunder.
4.3 The fees and expenses of the representatives or agents performing
such an examination shall be borne by the Company.
4.4 The books and records required by Paragraph 4.2 hereof shall be
preserved for at least three (3) years from the date of the royalty payment to
which they pertain.
5. CONFIDENTIAL INFORMATION
---------------------------
5.1 The Parties acknowledge that each Party may disclose to the other
Party technical data, economic information, know-how and data developed by the
disclosing Party. This information will be marked "Confidential" by the
disclosing Party.
5.2 The obligation to maintain the confidentiality of each Party's
confidential information shall extend five (5) years beyond the term of this
Agreement as set forth in Article 6 herein.
5.3 A Party receiving confidential information from a disclosing Party
shall not be prevented from using or disclosing information:
(a) which is now, or becomes in the future, public knowledge other
than by breach of this Agreement by the receiving Party;
(b) which is lawfully obtained by the receiving Party from a source
independent of the disclosing Party; or
(c) which is subsequently developed by the receiving Party
independent of the confidential information received hereunder.
2
6. TERM OF THE AGREEMENT
------------------------
6.1 This Agreement will not be binding upon the Parties until it has
been signed hereinbelow by or on behalf of each Party, in which event, it shall
be effective as of the later of the dates of execution of the Parties.
6.2 This Agreement shall be in full force and effect from the date
first herein written and shall remain in effect for so long as Edgetech
continues to receive any Gross Receipts, unless otherwise earlier terminated by
operation of law or by the joint written agreement of the Parties or otherwise
in accordance with the terms of this Agreement.
7. TERMINATION BY COMPANY
-------------------------
7.1 If Edgetech should fail to deliver to the Company any statement or
report when due, or fail to pay any royalty at the time that the same should be
due, or if Edgetech should violate or fail to perform any material covenant,
condition, or undertaking of this Agreement on its part to be performed
hereunder, then and in such event the Company may give written notice of such
default to Edgetech. If Edgetech should fail to make substantial progress toward
curing such default within thirty (30) days from the date of delivery of such
notice to Edgetech as defined in Article 11 ("Notices") hereof, the Company
shall have the right (but not the obligation) to terminate this Agreement by
written notice to Edgetech. Upon delivery of such notice of termination to
Edgetech, this Agreement shall automatically terminate. Such termination shall
not relieve Edgetech of its obligation to pay any royalty due or owing at the
time of such termination and shall not impair any rights of Edgetech.
8. WARRANTY BY EDGETECH
-----------------------
8.1 Edgetech warrants that it has the lawful right to enter into this
Agreement and to perform all of its obligations timely hereunder.
9. WAIVER
---------
9.1 It is agreed that no waiver by either Party hereto of any breach or
default of any of the covenants or agreements herein set forth shall be deemed a
waiver as to any subsequent and/or similar breach or default.
10. ASSIGNABILITY; BINDING EFFECT
---------------------------------
10.1 The Company may in its sole discretion assign this Agreement and
its rights and obligations hereunder in whole or in part to any third
party/parties upon written notice thereof to Edgetech. Edgetech shall not assign
this Agreement and/or the Datawind Agremeent and/or any of its rights and/or
obligations hereunder and/or thereunder, respectively, to any third party
without the prior written consent of the Company (or its assignee(s)), which
consent may be withheld in the Company's (or its assignee(`s) (s') sole
discretion without any liability to such entity. This Agreement and all of its
terms and conditions shall be binding upon each of the Parties' respective
successors and assigns.
11. NOTICES
-----------
11.1 Any payment, notice, or other communication required or permitted
to be given to either Party hereto shall be deemed to have been properly given
and to be effective on the date of delivery if delivered in person or by
first-class certified mail, postage paid, or via nationally recognized overnight
delivery service to the respective address given below, or to such other address
as it shall designate by written notice given to the other Party as follows:
In the case of the Company: Xxxxxxxxx & Xxxxxxx Group, LLC
000 Xxxxx Xxxxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxxx, Managing Member
3
In the case of Edgetech: EdgeTech Inc.
0000 XX 0xx Xxxxxx, Xxxxx 0
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxx, President
12. FORCE MAJEURE
-----------------
12.1 Neither Party shall be responsible for delay or failure in
performance of any of the obligations imposed by this Agreement, provided such
failure shall be occasioned by fire, flood, explosion, lighting, windstorm,
earthquake, subsidence of soil, court order or government interference, civil
commotion, riot, war, or by any cause of like or unlike nature beyond the
control and without fault or negligence of such Party.
13. GOVERNING LAW AND RELATED MATTERS
-------------------------------------
13.1 This Agreement shall be interpreted and construed solely in
accordance with the laws of the State of Florida, without giving effect to its
conflict of law principles. Any action and/or proceeding relating to or arising
out of this Agreement shall be brought solely in the federal and/or state courts
located in Palm Beach County, Florida. Each of the Parties to this Agreement
agree that such jurisdiction and venue is acceptable to such Party. The
prevailing Party in any such action and/or proceeding shall be entitled to
recover its reasonable attorney's fees and costs from the other Party.
14. MISCELLANEOUS
-----------------
14.1 The headings of the several sections are inserted for convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.
14.2 No amendment or modification hereof shall be valid or binding upon
the Parties unless made in writing and signed as aforesaid.
14.3 This Agreement embodies the entire understanding of the Parties
and shall supersede all previous communications, representations, or
understandings, either oral or written, between the parties relating to the
subject matter hereof.
14.4 In case any one or more of the provisions contained in this Agreement shall
for any reason be held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any other
provisions hereof, but this Agreement shall be construed as if such invalid or
illegal or unenforceable provisions had never been contained herein.
14.5 As each of the Parties hereto have been represented by counsel in
connection with the negotiation and preparation of this Agreement, each such
Party agrees that the rule of construction that ambiguities shall be construed
against the drafter of the document is not applicable to this Agreement.
IN WITNESS WHEREOF, both Edgetech and the Company have executed this
Agreement on the day and year first set forth above, in duplicate originals, or
in counterparts via telecopier by their respective officers or representatives
hereunto duly authorized, to be effective as of the date first set forth above.
EDGETECH INC. XXXXXXXXX & XXXXXXX, LLC
By: /s/ Xxx Xxxxxx By: /s/ Xxx Xxxxxxx
Xxx Xxxxxx, President Xxx Xxxxxxx, Managing Member
4
