AGREEMENT CONCLUDED BETWEEN ON FEBRUARY 17, 2000 BETWEEN
TELIRAN ELECTRONICS, LTD., CYNET HOLDINGS, LLC AND CYNET, INC.
On the 16th day of February, 2000, Teliran Electronics, Ltd. of Israel and its
Subsidiaries, including without limitation Globewave, Inc. of New Jersey, United
States of America (hereinafter referred to as the "Teliran Group"), Cynet
Holdings, LLC, (hereinafter referred to as "Cynet Holdings") a State of Texas,
United States of America, limited liability company and Cynet, Inc , a State of
Texas, United States of America, corporation (hereinafter Cynet Holdings, LLC
and Cynet, Inc. are collectively referred to as the "Cynet Group") enter into a
definitive agreement concerning Exclusive Marketing Rights, Technical Support,
Options to buy equity, and Partnership in Future Technology.
1. AGREEMENT SUPERSEDES ALL PREVIOUS AGREEMENTS BETWEEN THE PARTIES. This
Agreement supersedes all previous agreements between the parties to
this Agreement; except the Purchase Order Number 1101 dated February 3,
2000 which is incorporated by reference in this Agreement This
Agreement is effective upon Cynet Holdings' delivery of the pledged
Cynet, Inc. shares pursuant to Paragraph 3 below.
2. EXCLUSIVE MARKETING RIGHTS. The Teliran Group grants to Cynet Holdings
for three (3) years exclusive sales and marketing rights in all
territories (including without limitation North America, South America,
Asia, and Africa also includes specialty markets) for the Teliran
Group's Complete PCcard (hereinafter referred to as the "Cell
Phone/Modem") subject to Cynet Inc.'s performance in the sales of the
product. The parties agree that the year 2000 minimum sales performance
is 23,700 units. The Cynet Group has issued to the Teliran Group a
written purchase order for 23,700 Cell Phone Modem units at the
purchase price of $350 per unit for various delivery dates on or before
December 31, 2000. The deliveries by quarter shall be as follows: 1st
Quarter - 3,000 units, 2nd Quarter 5,000 units, 3rd Quarter - 7,800
units and 4th Quarter - 7,900 units. The years 2001 and 2002 minimum
performance commitments shall be jointly developed by the Teliran Group
and The Cynet Group; but, in no event shall the sales performance be
less than the year 2000 performance. The Cynet Group agrees to provide
the Teliran Group, as requested, sales and marketing information
concerning actual and prospective sales by targeted markets, which
markets are to be mutually determined and agreed upon at a later date.
In the event the Cynet Group fails to meet sales objectives in any
given market and after the Teliran Group has given the Cynet Group
written notice of its concerns and has allowed adequate time for the
Cynet Group to cure the deficiencies and the Cynet Group has failed to
cure the noticed deficiencies, then the Teliran Group may take back the
sales and marketing rights for the specified market without affecting
the Cynet Group's exclusive sales and marketing rights in all of the
remaining markets. Nonetheless, the Cynet Group shall have the option
to have its obligation to purchase units reduced pursuant to the
Teliran Group revoking exclusive sales and marketing rights in
proportion to the projected number of units to be sold in that market
revoked.
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AGREEMENT
BETWEEN THE TELIRAN GROUP AND THE CYNET GROUP
FEBRUARY17, 2000
PAGE 2
In the event the Cynet Group fails to meet sales objectives in all
given markets and the Teliran Group elects to revoke all sales and
marketing rights pursuant to the procedure set forth above, this
agreement is terminated.
3. LINE OF CREDIT. On or before March 1, 2000, Cynet Holdings shall
deliver to the Teliran Group a letter of credit or other financial
guarantee acceptable to the Teliran Group in the amount of
$1,050,000.00 for covering the projected sales for the First Quarter of
2000 which guarantee shall be for 180 days from the date of issuance.
On or before April 1, 2000, Cynet Holdings shall deliver to the Teliran
Group a letter of credit or other financial guarantee acceptable to the
Teliran Group in the amount of $1,750,000.00 for covering the projected
sales for the Second Quarter of 2000 which guarantee shall be for 180
days from the date of issuance. Until Cynet Holdings delivers to the
Teliran Group the Letters of Credit described above, Cynet Holdings
shall pledge as security to the Teliran Group 1,000,000 shares of
Cynet, Inc. stock, which shares shall be held and distributed pursuant
to a mutually agreed upon Escrow Agreement as follows:
(i) The Teliran Group shall return to Cynet Holdings
250,000 shares of the Cynet, Inc. stock upon delivery
of the letter of credit in the amount of
$1,050,000.00 as described above;
(ii) The Teliran Group shall return to Cynet Holdings
250,000 shares of the Cynet, Inc. stock upon delivery
of the letter of credit in the amount of
$1,750,000.00 as described above; and
(iii) The Teliran Group shall return to Cynet Holdings the
remaining 500,000 shares of the Cynet, Inc. stock at
its option at any time after the requirements of (i)
and (ii) have been met but, in any case, the shares
shall be returned no later than March 31, 2001.
The pledged shares of stock shall be delivered to Xx. Xxxxxx Xxxxxx who
shall serve as the Escrow Agent and such delivery shall be on or before
February 24, 2000. CYNET shall bear all of the costs associated with
the sales, marketing, advertising and promotion of the Cell Phone Modem
during the term of its Exclusive Marketing Rights.
4. PURCHASE OPTION. Upon completion of one (1) year of the successful
fulfillment of this agreement, the Cynet Group shall have the option to
purchase up to five percent (5%) of Teliran Electronics, Ltd. at the
purchase price of $2.50 per share, which option shall be in effect
throughout the term of this agreement. Also, the Teliran Group shall
have the
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AGREEMENT
BETWEEN THE TELIRAN GROUP AND THE CYNET GROUP
FEBRUARY17, 2000
PAGE 3
the option to buy from Cynet, Inc. or Cynet Holdings shares in Cynet,
Inc. in an amount equal in value to $1,000,000 USD.
5. ONE YEAR ASSIGNMENT OF THE EXCLUSIVE MARKETING RIGHTS. Cynet Holdings,
with the approval of the Teliran Group, may assign to Cynet, Inc. the
exclusive sales and marketing rights in all territories (including
without limitation North America, South America, Asia, and Africa also
includes specialty markets) for the Teliran Group's Complete PCcard
(hereinafter referred to as the "Cell Phone/Modem") subject to Cynet
Inc.'s performance in the sales of the product for the first year of
the Agreement subject to Cynet, Inc. meeting the quarterly sales
commitments listed in Paragraph 2 above. Cynet, Inc.'s performance
requirements shall be reduced on a pro rata basis in the event that The
Teliran Group fails to deliver to Cynet Holdings the number of units on
a quarterly basis as described in Paragraph 2 above. At Cynet Holdings'
election, it may assign to Cynet, Inc. the Exclusive Marketing Rights,
as defined above, for any additional periods during the term of this
Agreement. Cynet Holdings may not assign the Exclusive Marketing Rights
under this Agreement to any third-party without the written approval of
The Teliran Group.
6. TECHNICAL SUPPORT. Beginning on February 1, 2000, the Teliran Group
shall pay to Cynet Holdings $10,000.00 per month to subsidize the Cynet
Group's employment of a minimum of two technical support persons to
support the sales and marketing of the Cell Phone Modem product. The
subsidy shall continue for the term of The Cynet Group's Exclusive
Marketing Agreement. At the Teliran Group's election, the subsidy may
be paid in cash or deducted from Cynet Holding's payment of Cell Phone
Modems previously ordered but for which the Teliran Group has not
received full payment.
7. PARTNERSHIP IN THE NEW TECHNOLOGY. The Cynet Group and the Teliran
Group agree to enter a joint venture regarding the research and
development of improvements and follow-ons to the Cell Phone Modem
product. The technology and products shall be own 50% by the Teliran
Group and 50% by the Cynet Group. This effort shall be directed through
the creation of a new and separate Israeli corporation or limited
liability company. Cynet Holdings and the Teliran Group agree to
execute a detailed written Joint Venture Agreement encompassing among
other things the provisions of the Paragraph. The Joint Venture
Agreement shall be completed and executed on or before April 1, 2000.
After the execution of the Joint Venture Agreement, the parties agree
to begin making investments in the Joint Venture entity. The
investments shall be in agreed installments to
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AGREEMENT
BETWEEN THE TELIRAN GROUP AND THE CYNET GROUP
FEBRUARY17, 2000
Page 4
equal a minimum of $5 million in cash or cash value on or before the
close of December 31, 2000. The Teliran Group's investment can include
transfer to the new company of some existing technology, knowledge and
persons associated with the Cell Phone Modem. Cynet Holdings shall
include some amount of cash as well as additional technology and
knowledge. The Teliran Group and Cynet Holdings shall agree as to the
cash value of any in-kind contributions to the new research and
development entity. The Teliran Group shall retain exclusive
manufacturing and production rights over the newly developed products.
Cynet Holdings shall retain exclusive marketing rights over the newly
developed products.
8. GOVERNING LAW. This Agreement shall be governed by the laws of Israel.
Venue and jurisdiction regarding this Agreement shall lie in the State
of Israel.
TELIRAN ELECTRONICS, LTD. CYNET HOLDINGS, LLC
"Teliran Group" "Cynet Holdings"
By: /s/ Xxxxxx Xxxx By: /s/ Xxxxxxx X. Xxxxx, Xx.
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Xxxxxx Xxxx, Chairman Xxxxxxx X. Xxxxx, Xx.
President
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, President
CYNET, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Executive Vice President
