Confidential Treatment Requested: Confidential portions of this document have been redacted and have been filed separately with the Commission. CONFIDENTIAL TERM SHEET BETWEEN CANTATA TECHNOLOGY, INC. AND INTERMETRO COMMUNICATIONS, INC. May 2, 2006
Exhibit
10.6
Confidential
Treatment Requested:
Confidential
portions of this document have been redacted and have been filed separately
with
the Commission.
CONFIDENTIAL
TERM SHEET
BETWEEN
CANTATA
TECHNOLOGY, INC.
AND
INTERMETRO
COMMUNICATIONS, INC.
May 2,
2006
This
proposal (the “Term Sheet”) summarizes the principal terms with respect to a
business relationship between Cantata Technology, Inc. and its affiliates and
subsidiaries (collectively, “Cantata”), formerly known as Excel Switching
Corporation and Brooktrout Technology, and InterMetro Communications, Inc.
(“InterMetro”). Both parties agree in good faith that appropriate documents in
final form will be executed regarding the subject matter of this Term Sheet
and
will contain all other essential terms of an agreed upon transaction (the
“Definitive Agreement”).
Purpose/Scope
Cantata
and InterMetro are hereby entering into a strategic agreement (the “Strategic
Agreement”) for the implementation of Cantata equipment into InterMetro’s
extensive nationwide network (the “Network”) through the deployment of
networking equipment and technology (the “Equipment”) provided by Cantata. The
parties agree that the term of the Strategic Agreement shall commence on the
date of this Term Sheet and terminate upon the signing of the Definitive
Agreement. During the term of the Strategic Agreement, InterMetro may deliver
purchase orders to Cantata as set forth below. Purchases pursuant to such
purchase orders shall be subject to the terms of this Term Sheet and of
Cantata’s Standard Terms and Conditions for Excel and Cantata Product Lines,
attached hereto as Exhibit A. In the event of any conflict between the terms
of
this Term Sheet and the Standard Terms and Conditions, the terms of this Term
Sheet shall apply. Upon the execution of the Definitive Agreement, all purchases
shall be subject to the terms of the Definitive Agreement.
The
following outlines the terms of the Strategic Agreement:
Terms
of the Proposed Relationship
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Cantata Responsibilities
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During
the term of the Strategic Agreement, Cantata will make available
to
InterMetro an aggregate amount of Equipment that
includes:
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(1) [***]
units [***], or the [***] of said equipment with [***] at the time
of
order; and
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[***]
Confidential material redacted and filed separately with the
Commission.
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(2) [***]
units [***], or the [***] or [***] of said equipment [***] at the
time of
order.
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Upon
InterMetro’s request and its purchase of [***] from Cantata, Cantata will
provide [***].
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If
Cantata develops a larger capacity version of the [***], InterMetro
will
be able to purchase the larger version of the equipment under the
Strategic Agreement at terms to be mutually negotiated in good faith
by
both parties.
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Upon
receiving proper written notice from InterMetro, Cantata will deliver
the
Equipment to an InterMetro specified destination within ten (10)
business
days from receipt. All costs associated with the delivery of Equipment
will be directly paid by InterMetro or passed through to InterMetro
at
cost by Cantata, with the exception of shipments related to the
replacement of defective equipment, which will be borne by
Cantata.
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Cantata
will [***] for each [***] received by InterMetro under the Strategic
Agreement, pursuant to the terms of [***]. In addition, Cantata will
provide InterMetro with any new features or functionality that becomes
available for [***].
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All
Equipment delivered by Cantata will be new and in proper working
condition. Any Equipment found to be defective within the term of
the
Equipment’s Support Service term will be replaced by Cantata subject to
the terms of the Support Agreement and the replacement Equipment
will be
delivered to an InterMetro specified destination within [***] of
receipt
of proper written notice by InterMetro.
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InterMetro
Responsibilities
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InterMetro
will, from time to time, order specified quantities of the Equipment
with
advance written notice to Cantata (each an “Equipment Order”). InterMetro
will make an initial Equipment Order of [***] upon execution of the
Strategic Agreement. Unless otherwise agreed to by both parties in
writing, InterMetro will have the right to order up to [***] within
any
calendar month.
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Confidential
Term Sheet
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2
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[***]
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Commission.
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For
each piece of Equipment, [***] under the terms of the Strategic Agreement,
InterMetro will [***]. InterMetro will [***] and will
[***].
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[***]
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InterMetro
and Cantata agree that Cantata will offer to InterMetro [***] current
equipment and technology, developed by Cantata.
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Exclusive
Rights
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Cantata
will provide InterMetro: (1) a right of first refusal to [***], and
(2)
the exclusive right to purchase more than [***] under terms and conditions
substantially similar to the terms of this Term Sheet. Additionally,
during the [***] of the Strategic Agreement, Cantata may not
[***].
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Economic
Value
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Listed
below are the Economic Values that pertain to each Equipment Order
under
this Strategic Agreement:
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[***]
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[***]
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[***]
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Purchase
Price
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The
Purchase Price for each piece of Equipment will be determined based
upon
the purchase option selected by InterMetro at the time of each Equipment
Order.
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[***]
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If
InterMetro indicates that it has [***], the Purchase Price will be
equal
to the [***] for that Equipment Order. The Purchase Price and the
related
sales tax will be paid 50% due upon delivery of the Equipment to
InterMetro and 50% due 30 days after
delivery
of the Equipment to InterMetro.
[***]
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Confidential
Term Sheet
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3
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[***]
Confidential material redacted and filed separately with the
Commission.
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If
during the term of this Strategic Agreement, Cantata sells any Equipment
to a third party under substantially similar terms, conditions, and
quantities when considered in the aggregate, at a price below the
then
current Economic Value provided for under the Strategic Agreement
(a
“Threshold Price”), the Economic Value for [***] will be adjusted to be
the new Threshold Price for [***].
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[***]
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If
InterMetro indicates that it [***] at the time of the Equipment Order,
the
Purchase Price for each [***] will be equal to [***] for that Equipment
Order and the Purchase Price for [***] will be [***] of each [***].
If
InterMetro selects [***] or if the Strategic Agreement has been
terminated. InterMetro will have the right, in its sole discretion,
to pay
any [***].
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[***]
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If
InterMetro has selected the [***], the Purchase Price plus the related
sales tax for each piece of Equipment [***] will be paid by InterMetro
[***]. The following summarizes the basic parameters of the
[***]:
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(1) [***]
related to each [***] will be [***] and [***]
related
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Confidential
Term Sheet
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4
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[***]
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Commission.
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to
the [***] will be [***]
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(2) [***]
for each piece of Equipment will be equal to:
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[***]
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[***]
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[***]
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(3) [***]
for each [***] will be equal to:
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[***]
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[***]
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Beginning
after the second full [***], Cantata will have the right to notify
InterMetro in writing during the subsequent [***]. Upon receipt of
a [***]
Notice, InterMetro will have until the end of the current [***],
to notify
Cantata in writing that [***]
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(4) [***]
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(5) The
aggregate [***] paid by InterMetro for any specific piece of Equipment
[***] will not exceed the Purchase Price plus related sales tax for
that
piece of Equipment [***]
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Confidential
Term Sheet
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5
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[***]
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Commission.
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Potential
Customers
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[***]
of potential customers that will [***] through the
[***]
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InterMetro
Cash Payments
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If
subsequently agreed by both parties, any cash payment that is to
be made
by InterMetro to Cantata under the Strategic Agreement may be made
in the
form of InterMetro stock. The value of such stock will be equal to
the
price per common share, or common share equivalent, paid by investors
in
InterMetro’s most recent round of financing if InterMetro is privately
held, or the 30 day average trading price for InterMetro common stock
if
InterMetro is public.
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[***]
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Within
[***], InterMetro will provide Cantata with [***]
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Term
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The
term of the Strategic Agreement will be for [***] (the “Initial Term”). At
the end of the Initial Term:
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(1) Cantata
will no longer be required to provide InterMetro with Equipment per
the
terms of the Strategic Agreement;
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(2) InterMetro
will no longer be able to order Equipment from Cantata per the terms
of
the Strategic Agreement; and
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(3) [***]
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Press
Releases and
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Authorized
Use of Name
Neither party may use the other party’s name or trademarks, or issue any
publicity or make any public statements concerning the other party
or the
existence or content of this Strategic Agreement, without the other
party’s prior written consent after the other party has reviewed the
proposed publicity material and any corrections or modifications
have been
incorporated. Notwithstanding, both parties agree to issue a joint
press
release related to the parties entering into the Strategic Agreement
within 30 days of the execution of the Strategic
Agreement.
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Confidential
Term Sheet
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6
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[***]
Confidential material redacted and filed separately with the
Commission.
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Dated
as of this 2nd day of May 2006.
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CANTATA
TECHNOLOGY, INC.
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INTERMETRO
COMMUNICATIONS, INC.
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x /s/ ▇▇▇▇▇
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x /s/ ▇▇▇▇▇▇▇
▇▇▇▇
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FOR
CANTANA TECHNOLOGY, INC.
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FOR
INTERMETRO COMMUNICATIONS, INC.
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PRINTED
NAME
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PRINTED
NAME
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CQO
& VP Operations
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CEO
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TITLE
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TITLE
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May
2, 2006
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May
2, 2006
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DATE
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DATE
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ADDRESS:
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ADDRESS:
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Confidential
Term Sheet
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7
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