EXHIBIT 10.6
[DATAWIND LOGO]
000 Xxxx Xxxxxxxx Xxxx, #0000
Xxxxxxxx, Xxxxxx
Xxxxxx X0X 0X0
Tel# 0.000.000.0000
Fax# 0.000.000.0000
xxxx://xxx.xxxxxxxx.xxx/
DECEMBER 21, 2005
VIA FACSIMILE
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EdgeTech Inc.
0000 XX 0 Xxx., Xxxxx 0
Xxxx Xxxxx, XX 00000
Attn: Xxx Xxxxxx
SUBJECT: BINDING LETTER AGREEMENT
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Dear Xx. Xxxxxx:
This Binding Letter Agreement ("Letter Agreement" or "Agreement") is made as of
this 21st day of December 2005, by and between DATAWIND Net Access Corporation
("DataWind") a Delaware corporation, and EdgeTech Inc. ("EdgeTech"), a Florida
corporation.
Whereas the parties have had a close working relationship in the marketing and
sales of PocketSurfer devices and services, and the parties wish to memorialize
their agreement for the current generation, next-generation (with improved
industrial design, embedded GPRS modem, backlit keyboard, offline organizer and
GPS functionality) and any subsequent generations of PocketSurfer ("PocketSurfer
II" or the "Products").
Now, therefore, for good and valuable consideration, the receipt and sufficiency
of which is acknowledged by each of the parties hereto, the parties agree as
follows:
1. PRODUCT MARKETING & DISTRIBUTION. DataWind will, during the term of
this Agreement, sell to EdgeTech, and EdgeTech will purchase from
DataWind, the Products to be redistributed world wide by EdgeTech
exclusively to the vertical markets defined herein. EdgeTech shall
devote its best reasonable commercial efforts for the adequate
exploitation and distribution of the Products to these vertical markets
and shall maintain an organization sufficient therefore. EdgeTech will
aggressively market and sell the Products, for the limited purpose of
demonstrating and selling to customers.
2. PRODUCT COSTS & MANUFACTURING MARGINS. Datawind shall limit its
hardware margin on all Products to a maximum of 10% above the
subcontracted cost of manufacturing the Products. In consideration of
this reduced margin, EdgeTech shall provide DataWind with common shares
equal to 10% of the issued and outstanding shares in EdgeTech as of the
date first set forth above. EdgeTech can set the retail price and earn
the appropriate margin. DataWind shall deliver the Products F.O.B. at
the manufacturing facility and provide warranty support for Products
delivered to DataWind's Montreal facility. Payment shall be via
irrevocable, unconditional and transferable letter of credit in favor
of DataWind from a nationally recognized U.S. bank, a minimum of 3
months prior to scheduled delivery. EdgeTech may outsource other
Montreal 1-514-871-094 - Toronto 1-905-712-0505 - Dallas 0-000-000-0000
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manufacturers if DataWind provides consent. The Products shall carry
DataWind's standard limitation of liability and warranty conditions, as
set or modified by DataWind from time to time.
3. SERVICE COSTS & MARGINS. EdgeTech shall set the retail price for the
monthly service fee at U.S. $7.00 per month or more, on the Products it
sells. DataWind shall provide credit-card billing to subscribers at the
rate set by EdgeTech. DataWind shall charge $7.00 per subscriber per
month, and pay the difference to EdgeTech on the fifth working day of
each month for the previous month. In recognition of the special
relationship between the parties, EdgeTech may reduce the monthly
service fee to be paid to DataWind by EdgeTech to U.S. $6.00 by
prepaying to DataWind a minimum of $250,000 of the aggregate service
fee for such number of Products units as EdgeTech may desire on a
monthly, bimonthly or yearly basis. DataWind may reasonably change the
service fee each year to solely reflect increases due to inflation and
base costs of hosting and bandwidth. The service pricing specifically
is for DataWind's acceleration service, and not for GPRS wireless
network costs. Wireless network costs, shall be as charged by the
wireless carrier.
BANNER REVENUE. To the extent EdgeTech may secure any banner revenues
relating to the use of the Products, EdgeTech shall retain 50% of all
such banner revenues and EdgeTech will pay DataWind 50% of all such
banner revenues.
4. EXCLUSIVITY. Based on the terms and conditions defined herein, DataWind
hereby grants EdgeTech exclusive right on a world wide basis to market
and distribute the Products to the vertical markets defined as (i)
Fantasy Sports and Sports Book; (ii) Online Poker; (iii) Music, Movie
and Television; (iv) Adult Markets (adult rated content); (v) Financial
Services Markets; This Exclusivity does not restrict DataWind from
selling its products via infomercial, television or product placements
in movies, other than to sell the applications of the vertical markets
defined herein.
a. In recognition of the special relationship between the parties,
DataWind shall waive the requirement for any simultaneous
purchase of Products with the execution of this Agreement.
b. The parties agree that DataWind and Edetech have a unique working
relationship, in consideration of which the performance criteria
have been significantly reduced as would have been offered to
other distribution partners. The annual performance criteria
necessary to maintain these exclusive rights as to (i) through
(iii) shall only be 3,000 new subscribers in each of such three
exclusive vertical markets for the year ending December 31, 2006
and each year ending thereafter, monitored on a semi-annual
basis. The first performance monitoring period requiring 1,500
new subscribers in each vertical shall be from the date of this
Agreement to December 31, 2006, followed by each subsequent
monitoring period on a semi-annual basis thereafter. If Edge Tech
does not meet the annual performance criteria described above in
any of the three designated vertical markets, EdgeTech's
exclusive distribution rights shall automatically convert to
non-exclusive, and if EdgeTech does not meet even 50% of the
target in any monitoring period, distribution rights for the
specific vertical would never the less still be non- exclusive
until such time as Datawind may retain a third party on an
exclusive basis to market and distribute the Products in the
specific vertical market. At such time as when EdgeTech may
obtain and maintain 15,000 subscribers on an annual basis in each
of such three designated vertical markets, EdgeTech shall only be
required to acquire an
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additional 1,500 subscribers in each of such three designated
vertical markets on an annual basis in order to continue to
maintain exclusivity in each of such three designated vertical
markets. Countries outside of North America may be excluded from
the exclusive and/or distribution territory of these three
vertical markets by the terms and process set forth in clause 4
(g).
c. As to vertical markets (iv) and (v), EdgeTech shall be required
to pay an aggregate one time fee of $400,000 to DataWind payable
as follows: $200,000 on March 8, 2006; $100,000 on July 10, 2006;
and $100,000 on October 10, 2006. EdgeTech shall automatically
and without any further notice lose its distribution rights to
such two vertical markets if any of such payments are not timely
made. No payments will be refunded if a subsequent payment is not
made in a timely manner and the distribution rights have been
cancelled. Commencing in year 2007 and thereafter, EdgeTech shall
be required to pay DataWind a one time fee of $10 per Products
unit purchased, manufactured or activated by EdgeTech in each of
these two vertical markets. To maintain exclusivity in these two
vertical markets, the minimum annual quantities of subscribers
for year 2006 shall be 5,000 subscribers for the Adult Markets
and 15,000 subscribers for the Financial Services Markets; for
year 2007, an additional 10,000 subscribers for the Adult Markets
and an additional 30,000 subscribers for the Financial Services
Markets; for year 2008, an additional 10,000 subscribers for the
Adult Markets and an additional 30,000 subscribers for the
Financial Services Markets. Notwithstanding the foregoing, if at
any time prior to the end of year 2008 EdgeTech has acquired
25,000 subscribers for the Adult Markets and 75,000 subscribers
for the Financial Services Markets, then, on an ongoing annual
basis, the minimum additional annual quantity of subscribers for
the Adult Markets shall be 5,000 and the minimum additional
annual quantity of subscribers for the Financial Services Markets
shall be 15,000. If any of the minimum annual quantities of
subscribers described above are not met as to either of such two
vertical markets, then EdgeTech shall have non-exclusive rights
to continue to distribute the Products in either or both of such
two vertical markets in which the minimum annual quantities of
subscribers described above is/are not met. The distribution
rights for these two vertical markets shall specifically exclude
India, China, Germany, and England. Additional countries outside
of North America may be excluded from the exclusive and/or
distribution territory of these two vertical markets by the terms
and process set forth in clause 4 (g).
d. DataWind agrees that during the period that EdgeTech maintains
exclusivity, DataWind shall not seek, engage or appoint any other
person or entity to market or distribute the Products to any of
the defined vertical markets. DataWind will publicly endorse
EdgeTech as its official and exclusive partner to promote each of
these vertical markets.
e. Under the circumstance that DataWind does not exist, or is unable
to continue to provide its wireless internet services, DataWind
or the surviving party shall insure that such services are
continued to be provided by an independent 3rd party hosting
facility of its choice at the same terms and condition as set
forth herein.
f. EdgeTech may ask Datawind for the additional features set forth
in Exhibit 4.f attached hereto and made a part hereof at the
minimum production volumes and costs detailed therein
g. DataWind may upon 10 day written notice, restrict specific
countries outside of the U.S. and Canada, from any specific
vertical in which EdgeTech does not have a minimum of 500 active
subscribers in such specific country by the end of such 10 day
time period, if DataWind is in the process of providing
exclusivity to a local distributor in those specific markets. For
example, if DataWind appoints a distributor in Germany, and
provides such
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notice to EdgeTech, then EdgeTech's exclusive rights shall be
reduced to all other countries, excluding Germany, if EdgeTech
does not have a minimum of 500 subscribers in Germany by the end
of such 10 day period. EdgeTech may not sell in any territory
that has been removed from its exclusivity, and where DataWind
has provided exclusivity for the territory to another party.
5. CUSTOMER SUPPORT; RELATED MATTERS. EdgeTech will provide at its cost a
toll-free telephone line at DataWind's facilities, and all costs
related to the toll-free telephone line will be borne by EdgeTech,
payable in advance. DataWind shall provide EdgeTech branded service on
such toll-free telephone line during normal business hours
eastern-standard time. Any and all customers procured by EdgeTech in
the vertical markets in which EdgeTech has exclusivity and any and all
information relating to such customers shall constitute the sole and
exclusive property of EdgeTech and shall not be used by DataWind
directly or indirectly for any purpose whatsoever except to comply with
its billing obligations hereunder. Any other customers on which
EdgeTech requires exclusivity will have their names, contact
information, period of exclusivity and performance criteria added to
Attachment-1 on a regular basis with the consent of both parties.
6. COMMISSIONS. EdgeTech acknowledges that under certain circumstances,
specific customers maybe unwilling or unable to purchase directly from
EdgeTech and may instead purchase from DataWind. Under such
circumstance, DataWind shall pay EdgeTech a commission of 5% of the net
revenue derived by DataWind.
7. ASSIGNABILITY. EdgeTech, upon notice and prior written approval from
DataWind may assign its rights and obligations under this Agreement to
any entity affiliated or otherwise related to EdgeTech. DataWind will
not unreasonably withhold approval. DataWind agrees to the pending
share exchange between EdgeTech and a public trading company and any
assignment of EdgeTech rights and obligations hereunder to such entity
and or related party in connection therewith.
8. MISCELLANEOUS.
(a) Governing Law; Venue. This Letter Agreement shall be construed in
accordance with and governed for all purposes solely by the laws
and public policy applicable to contracts in the State of
Delaware without regard to its rules governing conflicts or
choice of law. The parties irrevocably agree (i) that any claim,
action or proceeding instituted by either party in connection
with or relating to this Letter Agreement shall be brought in the
appropriate state and or federal court located in the State of
Delaware, and (ii) to waive all objections and defenses to
subject matter or in personal jurisdiction based on forum non
convenes or other legal theory. The prevailing party in any
action and/or proceeding shall be entitled to recover its
reasonable attorney's fees and costs from the other party.
(b) Independent Contractors. In performing their respective duties
and obligations hereunder, DataWind and EdgeTech shall be and act
as independent contractors. Neither party, nor any of its
employees, shall be in any sense partners, employees or agents of
the other party, or have any authority to represent or bind the
other party in any way. Unless specifically authorized herein,
neither party shall have the right to make or enter into any
contracts or agreements of any nature whatsoever on behalf of the
other.
Montreal 1-514-871-094 - Toronto 1-905-712-0505 - Dallas 0-000-000-0000
London, England 02079934286 - Mexico City 525553511847
000 Xxxx Xxxxxxxx Xxxx, #0000
Xxxxxxxx, Xxxxxx
Xxxxxx X0X 0X0
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Fax# 0.000.000.0000
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(c) Counterparts; Facsimile Execution. This Letter Agreement may be
executed in one or more counterparts, each of which shall be
deemed to be an original but together shall constitute only one
instrument. The parties expressly agree that this Letter
Agreement may be executed by the exchange of facsimile signatures
and that such facsimile signatures shall have the same force and
effect as original signatures for all purposes.
(d) Term. This Letter Agreement shall have a term of indefinite
duration in five (5) year consecutive segments. As long as
EdgeTech has maintained the minimum volume performance in Clause
4, each five (5) year segment shall be extended upon written
notification provided by EdgeTech to DataWind no less than one
hundred twenty (120) days and no more than one hundred and eighty
(180) days prior to the expiration of any given five (5) year
segment, sent via overnight nationally recognized delivery
service, to DataWind's last known address. Additionally, either
party may terminate this Letter Agreement upon a material breach
by the other party, that continues beyond a 30-day written
notice.
(e) Maintenance of Books and Records; Right of Parties to Inspect and
Audit Books and Records of Other Party. The parties shall
maintain appropriate books and records, in accordance with GAAP,
consistently applied and in conformity with past practices and
applicable S.E.C. rules and regulations, relating to its
activities in connection with this Agreement. Either party shall
have the ability and right to inspect and audit the books and
records of the other party concerning its performance under this
Agreement. The inspecting party, or its duly appointed
representative, will conduct the inspection only during the other
party's normal business hours upon a written request submitted to
the other party at least twenty (20) days prior to the day of the
inspection or sixty (60) days if the other party is in the
process of conducting its annual audit. The inspecting party
shall be solely responsible for the costs of any such inspection
or audit. No more than two such requests may be made on an annual
basis.
If you agree to the terms set forth above, please sign below to
indicate your acceptance.
Best regards,
/s/ Xxxxxx Xxxxx Xxxx
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Xxxxxx Xxxxx Xxxx, President & CEO
DATAWIND Net Access Corporation
000 Xxxx Xxxxxxxx Xxxx, Xxxxx# 0000
Xxxxxxxx, XX, Xxxxxx X0X 0X0
Tel# 000-000-0000 / Fax# 000-000-0000
Montreal 1-514-871-094 - Toronto 1-905-712-0505 - Dallas 0-000-000-0000
London, England 02079934286 - Mexico City 525553511847
000 Xxxx Xxxxxxxx Xxxx, #0000
Xxxxxxxx, Xxxxxx
Xxxxxx X0X 0X0
Tel# 0.000.000.0000
Fax# 0.000.000.0000
xxxx://xxx.xxxxxxxx.xxx/
AGREED AND ACCEPTED:
EDGE TECH, INC.
By: /s/ Xxx Xxxxxx
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Xxx Xxxxxx, President
Montreal 1-514-871-094 - Toronto 1-905-712-0505 - Dallas 0-000-000-0000
London, England 02079934286 - Mexico City 525553511847
EXHIBIT 4F
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FEATURES: COSTS: MINIMUM
U.S.$/UNIT VOLUME PER
ORDER:
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1. Aesthetic Improvements: US$ 121.00/unit 3,500 Devices
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a. Backlit Keyboard
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b. Evening out the weight distribution
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c. Snap-open/Snap-close hinge, that will
sit stable on a desktop
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d. Redesign the PocketSurfer casing for
sleeker effect/attractive design
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e. Higher contrast & brightness to the
screen
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f. Improved text input function
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g. Connectivity upgrades will be
architectured such that upgrades can
occur over-the-air
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2. PDA: Sufficient memory for an offline
organizer & firmware with an offline
organizer.
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3. GPS: Module for location based
services.
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4. SD Card slot: to support external
memory cards for caching and storage
of web pages.
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GPRS module (cost of module, power-circuitry, $59.00 3,500
antenna, antenna-cable and circuitry)
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WiFi SD Card $25.00 3,500
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Audio capability, to play MP3s. Apx. 120 days. $20.00 5,000
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Bluetooth Headset for MP3s. Apx. 120 days. $25.00 7,000
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Cellular voice functionality for Bluetooth Headset $17.00 7,000
(in addition to GPRS module). Apx. 180 days.
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Video capability, to play MPEG movies. Apx. 180 $85.00 10,000
days
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