Strategic Alliance and Technology Development Agreement - NCT Group Inc., Advancel Logic Inc. and Infinite Technology Corp.
STRATEGIC ALLIANCE AND TECHNOLOGY DEVELOPMENT AMENDMENT
Effective June 30, 2000, this TECHNOLOGY DEVELOPMENT AMENDMENT
("Amendment") among NCT Group, Inc. ("NCT"), a Delaware corporation, Advancel
Logic, Inc. ("Advancel"), a California corporation and a wholly owned subsidiary
of NCT, and Infinite Technology Corporation ("ITC"), a Delaware corporation
amends and replaces in total the Strategic Alliance and Technology License
Agreement with effective date of May 8, 2000 among NCT, Advancel, and ITC.
WITNESSETH:
WHEREAS, Advancel has developed certain proprietary technology and designs
for JAVA(TM) embedded microprocessors to significantly enhance the rate of
instruction execution of such microprocessors. Advancel's technology and designs
are known as the "tiny J" (TJ) and "tiny2J" (T2J) microprocessor designs (the
"TJ Technology" and the "T2J Technology," respectively);
WHEREAS, Advancel has entered into a license agreement with ST
Microelectronics S.A. and Microelectronics S.r.l., a French and an Italian
company, respectively (collectively "ST") for the license and further
development of the T2J Technology (the "ST Agreement"), a true, correct and
complete copy of which has been attached and incorporated herein by reference;
and
WHEREAS, ITC has developed advanced DSP chip technology and is experienced
in the design, prototyping and manufacture of System on Chip products.
NOW THEREFORE, in consideration of the above and the representations,
warranties and covenants hereinafter set forth, the parties agree as follows:
ARTICLE I Development
Section 1.1 DSP SoC. ITC shall use its best efforts to develop, make, market and
sell a RISC based DSP System-on-Chip ("SoC") semiconductor chip based upon the
RISC Technology of ITC's sole selection for which NCT shall pay ITC $2,450,000
in accordance with the terms and conditions of ARTICLE IV. ITC shall use its
reasonable best efforts to make the RISC based DSP available to purchase by NCT
for a price of $5.00 per unit. ITC will use its best efforts to use the TJ
technology for the RISC chip for the SoC.
ARTICLE II STRATEGIC ALLIANCE
Section 2.1 Joint Development. If ITC and NCT agree jointly to develop
microprocessors or semiconductor chips not otherwise contemplated hereby, either
under a funded development project or ITC's Publishing Business model (including
the general purpose JAVA(TM) processor and any JAVA(TM) based DSP SoC), ITC
shall agree to sell to NCT such microprocessors or chips at the best price
charged to ITC's customers for such microprocessors or chips or for
microprocessors or chips of similar complexity, performance and manufacturing
technology. NCT shall have the right to incorporate or use them in NCT-sponsored
products.
ARTICLE III AUDITS
NCT shall keep full and accurate books and records pertaining to their
performance under this Amendment for a period of at least three (3) years after
the date a given monthly payment is made by NCT to ITC . NCT shall permit an
independent certified public accountant selected by the other and reasonably
acceptable to both, to examine such books and records, at the sole cost and
expense of the auditing party, upon reasonable notice during normal working
hours, but not later than three (3) years following the payment in question, for
the sole purpose of verifying the royalty payments and reports and accountings
related thereto. Such accountant shall not disclose to the auditing Party any
other information of audited Party. Prompt adjustment shall be made to
compensate for any errors or omissions disclosed by such examination. In the
event such examination shows underreporting and underpayment in excess of five
percent (5%) for any twelve (12) month period, then Party underpaying shall pay
the underpaid Party the cost of such examination together with any additional
sum that would have been payable to the underpaid Party had underpaying Party
reported correctly, plus interest at the rate of two per cent (2%) over the
prime rate as published in the Wall Street Journal during the period of
delinquency.
ARTICLE IV Closing
Section 4.1 Date. Closing of this Agreement shall take place on August 21, 2000,
at 10.00 a.m. at the offices of ITC, or at such other time, date and place as
may be mutually agreed to by the parties.
Section 4.2 NCT Payment. At the Closing NCT shall deliver to ITC the following:
a. NCT common stock having a market value of $3,000,000, which stock shall be
registered by NCT (on the NCT "Registration Statement") on a best efforts
basis under applicable securities laws so as to be immediately salable in
the open market;
b. a promissory note (the "Note") payable to ITC in the amount of one million
dollars ($1,000,000) (see Exhibit A, attached). Until such time as the
Registration Statement is declared effective by the Securities and Exchange
Commission, ITC may draw against the Note at the rate of seventy five
thousand dollars ($75,000) per month on the 15th day of each month,
commencing two months from the date of the Closing of this Agreement. Upon
effectiveness of the Registration Statement, ITC shall mark the Note
"Cancelled", return the Note to NCT, and within one hundred twenty days of
the effectiveness of the Registration Statement, return to NCT all amounts
previously advanced to ITC under the Note.
Section 4.3 Short-Fall and Overage. In the event ITC does not receive $2,450,000
in proceeds from the sale of the NCT shares, ITC will inform NCT in writing of
the amount of the short-fall from the required $2,450,000 that it was to receive
from the NCT shares and NCT will make up the short-fall in cash or return to ITC
a sufficient number of ITC shares (received by NCT pursuant to the TECHNOLOGY
LICENSE AGREEMENT between ITC and NCT with effective date of June 30, 2000)
priced at $5 a share, equal to the amount of the short-fall. In the event that
after receiving $2,450,000 in proceeds from the sale of NCT shares there are NCT
Shares remaining, ITC will return the unsold share excess to NCT.
ARTICLE V Processor Support
ITC shall assume the support obligations of ST under ST Agreement at an expense
rate of 80% of the expenses to be paid by ST under the ST Agreement, but in no
event less than $80 per hour. NCT shall pay over to ITC 20% of the royalties
received from ST for its use of the existing TJ Technology and/or the existing
T2J Technology. ITC shall be entitled to receive 80% of the Non-Recurring
Engineering and 50% of the royalties actually paid by ST for the next generation
or modifications of the TJ Technology and/or the T2J Technology developed by
ITC.
ARTICLE VI Confidentiality
Section 6.1 Confidential Information. Each Party transferring confidential
information to the other Party shall assess all information transferred under
this Amendment to determine the requirement or lack thereof for treatment as
Confidential Information by the Receiving Party. Except as provided herein, the
Receiving Party agrees to use the same care and discretion, but at least
reasonable care and discretion, to avoid disclosure, publication, or
dissemination of received ITC or received NCT Confidential Information, as the
case may be, outside of the Receiving Party as the Receiving Party employs with
similar information of its own which it does not desire to publish, disclose, or
disseminate or to permit unauthorized use by others. All Confidential
Information transferred under this Amendment shall be conspicuously marked (on
each page which is loose leafed, or on the cover of permanently bound documents)
by the Transferring Party with an appropriate and conspicuously obvious legend
such as "ITC Confidential Information ", or "NCT Confidential Information", or
any other appropriate confidentiality legend, as the case may be, such legend to
clearly indicate to a person viewing or otherwise accessing such information
that it is of a confidential nature.
Section 6.2 Non-Tangible Form. Any transfer of Confidential Information which is
made in non-tangible form (for example, orally or visually) shall be confirmed
in writing by the Transferring Party together with a written summary thereof to
the Receiving Party, with a copy to the Program Managers of both Parties, within
thirty (30) days after the date of such transfer.
Section 6.3 Period of Confidentiality. The period of confidentiality applicable
to Confidential Information transferred under the provisions of Section 6.1
shall extend for five (5) years measured from the date of first receipt of
Confidential Information under this Amendment.
Section 6.4 Third Party Disclosure. Disclosure to a third party of Confidential
Information disclosed by a Transferring Party to a Receiving Party under this
Amendment shall not be precluded if such disclosure is:
a. In response to a valid order of a court or other governmental body of the
United States or any political subdivision thereof; provided, however, that
the Receiving Party shall first have made a good faith effort promptly to
obtain a protective order requiring that the information and/or documents
so disclosed be used only for the purpose for which the order was issued;
or
b. Otherwise required by law.
Section 6.5 Exceptions. The obligations specified above will not apply to any
Confidential Information which is disclosed to a Receiving Party hereto, that:
a. Is already in the possession of the Receiving Party without obligation of
confidence;
b. Is independently developed by the Receiving Party;
c. Is or becomes publicly available without breach of this Amendment;
d. Is lawfully obtained by the Receiving Party from a third party or parties
without the duty of confidentiality to the third party; or
e. Is released for disclosure by the Transferring Party with its written
consent.
ARTICLE VII Publicity
Neither Party shall disclose any of the terms and conditions of this Amendment
to any third party without the prior consent of the other Party. However both
Parties may disclose to third parties and publish the existence of this
Amendment and the general subject matter thereof without prior consent of or
notice to the other Party. Any additional disclosure or publication of details
of this Amendment or the relationship between the Parties under this Amendment
shall be subject to the prior written agreement to the content and form thereof
by both Parties.
ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF NCT AND ADVANCEL
NCT and Advancel jointly and severally represent and warrant to ITC as of the
date hereof as follows:
Section 8.1 Incorporation; Power and Authority; No Conflict. Each of NCT and
Advancel (a) is duly incorporated, validly existing and in good standing under
the laws of its place of incorporation; and (b) has the full power and authority
to own and operate its assets and to enter into, execute, deliver and perform
this Amendment, grant the License Rights granted herein and has obtained all
necessary approvals to enter into and perform this Amendment. The execution,
delivery and performance of this Amendment by NCT and Advancel respectively will
not violate, conflict with or result in a default under its certificate of
incorporation, bylaws or other Agreements by which it or its assets are bound.
Section 8.2 Enforceability. This Amendment is valid, binding and enforceable
against each of NCT and Advancel in accordance with its terms, subject as to
enforceability as to laws affecting bankruptcy, creditors rights and general
equitable principles.
Section 8.3 NCT Shares. When issued against the consideration contemplated
hereby, such share of NCT common stock to be issued hereunder will be duly
authorized, validly issued, fully paid, non-assessable and freely tradeable.
ARTICLE IX REPRESENTATIONS AND WARRANTIES OF ITC
ITC represents and warrants to NCT and Advancel as of the date hereof as
follows:
Section 9.1 Incorporation; Power and Authority; No Conflict. ITC (a) is duly
incorporated, validly existing and in good standing under the laws of its place
of incorporation; and (b) has the full power and authority to own and operate
its assets and to enter into, execute, deliver and perform this Amendment and
has obtained all necessary approvals to enter into and perform this Amendment.
The execution, delivery and performance of this Amendment by ITC will not
violate, conflict with or result in a default under its certificate of
incorporation, bylaws or other Amendments by which it or its assets are bound.
Section 9.2 Enforceability. This Amendment is valid, binding and enforceable
against ITC in accordance with its terms, subject as to enforceability as to
laws affecting bankruptcy, creditors rights and general equitable principles.
ARTICLE X MISCELLANEOUS
Section 10.1 Successors and Assigns. Except as otherwise provided herein, all of
the terms and provisions of this Amendment shall be binding upon, shall inure to
the benefit of and shall be enforceable by the respective successors and assigns
of the parties hereto. Except as otherwise specifically authorized herein, no
party to this Amendment may assign any of its rights under this Amendment to any
third party without the express prior written consent of the other parties
hereto which consent will not be unreasonably withheld.
Section 10.2 Entire Agreement. This Amendment constitutes the entire
understanding and agreement between the parties hereto and replaces all prior
Agreements, including the Agreement dated May 8, 2000, with respect to the
subject matter hereof. This Agreement cannot be modified or amended except by an
agreement in writing executed by both parties hereto.
Section 10.3 Export License. Each Party agrees that it will not in any form
export, re-export, resell, ship, or divert or cause to be exported, re-exported,
resold, shipped or diverted, directly or indirectly, any product or technical
data or software furnished hereunder, or the direct product of such technical
data or software to or which the United States Government or any agency thereof
at the time of export or re-export requires an export license or other
governmental approval without first obtaining such license or approval.
Section 10.4 Contingency. Anything contained in the Amendment to the contrary
notwithstanding, the performance of the obligations of the Parties hereto shall
be subject to all laws, both present and future, of any government having
jurisdiction over the Parties hereto, and to orders, regulations, directions, or
requests of any such government, or any department, agency, or corporation
thereof, and to any contingencies resulting from war, acts of public enemies,
strikes or other labor disturbances, fires, floods, acts of God, or any causes
of like or different kind beyond the control of the Parties, and the Parties
hereto shall be excused from any failure to perform or any delay in the
performance of any obligation hereunder to the extent such failure or delay is
caused by any such law, order, regulation, direction, request, or contingency.
Section 10.5 No Joint Venture, Agent. Nothing contained herein, or done in
pursuance of this Amendment, shall constitute the Parties as entering upon a
joint venture or shall constitute either Party hereto the agent for the other
Party for any purpose or in any sense whatsoever.
Section 10.6 APPLICABLE LAW. THE LAWS OF THE STATE OF TEXAS SHALL GOVERN THE
INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AMENDMENT,
REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF
LAW.
Section 10.7 Notice. Any notices required or permitted hereunder shall be given
to the appropriate party at the address provided below or at such other address
as the party shall specify in writing. Such notice shall be deemed given upon
personal delivery; if sent by telephone facsimile, upon confirmation of receipt;
or if sent by certified or registered mail, postage prepaid, three days after
the date of mailing. Notice hereunder shall be deemed to have been sufficiently
given when delivered in writing by certified mail return receipt requested by
either Party to the other and directed to:
If to NCT: If to INFINITE TECHNOLOGY:
NCT Group, Inc. Infinite Technology Corporation
20 Ketchum Street 1778 North Plano Road
Westport, CT 06880 Suite 310
Attn: President Richardson, TX 75081-1958
Attn: President
Section 10.8 Change of Address. Either Party may change its address for the
purposes of this section by a notice given to the other Party in the manner set
forth above.
Section 10.9 Integration. This Amendment and any documents or Amendments to be
executed and delivered pursuant hereto, contain the entire understanding of the
parties with respect to the subject matter hereof.
Section 10.10 Descriptive Headings. The headings in this Amendment are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
Section 10.11 Waivers. No waiver of any term, provision or condition of this
Amendment, in any one or more instances, shall be deemed to be or construed as a
further waiver of any such term, provision or condition or as a waiver of any
other term, provision or condition.
Section 10.12 Severability. If any provision herein, or the application thereof
to any circumstance, is found to be unenforceable, invalid or illegal, such
provision shall be deemed deleted from this Amendment or not applicable to such
circumstance, as the case may be, and the remainder of this Amendment shall not
be affected or impaired thereby.
Section 10.13 Counterparts. This Amendment may be executed in counterparts, each
of which shall be deemed an original, but all of which shall constitute one and
the same instrument.
Section 10.14 Disputes. The Parties agree that any disputes which arise out of
or are based upon this Amendment shall be subject to the following procedures:
a. before proceeding under Section 10.14, executive level managers of both
Parties will meet promptly and together review a presentation by each Party
concerning the matter in dispute. Only if the executive level managers are
unable to resolve the dispute within thirty (30) days of the meeting shall
either Party be free to institute a claim or action.
b. if proceedings under Section 10.14 a. fail to revolve a dispute, the
Parties agree to submit such dispute to mediation before any legal or
administrative process may be initiated by either Party, except disputes
relating to intellectual property that by their nature require immediate or
extraordinary relief. There shall be a forty-five (45) day time limit on
this mediation process, beginning from the initial request for mediation,
after which legal remedies may be initiated by either Party. The Parties
agree to cooperate in good faith in the selection of an independent third
party mediator, and to share equally the costs of the mediator's services.
Each Party shall bear their own legal expenses associated with the
mediation process.
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IN WITNESSETH WHEREOF, the parties have executed and delivered this
Amendment with legal and binding effect as of the date first above written.
NCT GROUP INCORPORATED INFINITE TECHNOLOGY CORPORATION
By: /s/Michael J. Parrella By: /s/Timothy Smith
--------------------------- ----------------------
Name: Michael J. Parrella Name: Timothy Smith
Title: C.E.O. Title: C.E.O.
ADVANCEL LOGIC INCORPORATED
By: /s/Michael J. Parrella
-----------------------------
Name: Michael J. Parrella
Title: C.E.O.