Elektrobit in agreement with TerreStar

The agreement between the parties comprises the development of two dual-mode reference smartphones where EB acts as the main integrator and delivers turn-key product creation services to TerreStar. The partnership with TerreStar is important for EB as it brings the opportunity to apply and enhance the company's strong wireless communications and 3G smartphone capabilities to a new demanding application area where HSPA and GMR-3G satellite technologies are combined to one seamless implementation. This is in line with EB's strategy for entering new markets and broadening the company's customer base. The EB billing under this agreement is time and material based and the total amount of revenues to be generated by this agreement depends on the progress of the development work. Under the agreement the aggregate amount of EB's billing during the years 2007, 2008 and 2009 may not, however, exceed 54 million USD. The revenues that are expected to be generated during the second half of 2007 have already been anticipated in the guidance given by EB on August 2, 2007. The main part of the development work is expected to be performed in 2008 and, assuming that the development under the agreement will proceed favourably, the agreement is expected to generate a significant share of EB's Mobile Terminal Solutions Business Unit's turnover in 2008. Correspondingly, TerreStar will be one of EB's most important customers. TerreStar and EB have agreed that any intellectual property rights arising from this development work will be mutually owned by TerreStar and EB, and they may be utilized by each party through licensing to third parties. The development work under the agreement includes typical risks related to R&D activities on new technologies, such as the availability and maturity of required components. Furthermore, it is subject to the terms and conditions for termination, which are customarily applied in the industry, and which provides, for example, TerreStar a possibility to terminate the agreement with a short notice by paying a ramp down fee.