Exhibit 10(al)
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
ARTICLE II 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 III STRATEGIC ALLIANCE
ARTICLE IV 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 V 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 VI Closing
ARTICLE VII 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.
ARTICLE VIII 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.
ARTICLE IX 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 X 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 XI Confidentiality
ARTICLE XII 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.
ARTICLE XIII 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.
ARTICLE XIV 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.
ARTICLE XV 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.
ARTICLE XVI 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 XVII 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 XVIII 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:
ARTICLE XIX 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.
ARTICLE XX 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.
ARTICLE XXI 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 XXII REPRESENTATIONS AND WARRANTIES OF ITC
ITC represents and warrants to NCT and Advancel as of the date hereof as
follows:
ARTICLE XXIII 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.
ARTICLE XXIV 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 XXV MISCELLANEOUS
ARTICLE XXVI 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.
ARTICLE XXVII 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.
ARTICLE XXVIII 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.
ARTICLE XXIX 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.
ARTICLE XXX 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.
ARTICLE XXXI 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.
ARTICLE XXXII 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
20 Ketchum Street Corporation
Westport, CT 06880 1778 North Plano Road
Attn: President Suite 310
Richardson, TX 75081-1958
Attn: President
ARTICLE XXXIII 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.
ARTICLE XXXIV 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.
ARTICLE XXXV 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.
ARTICLE XXXVI 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.
ARTICLE XXXVII 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.
ARTICLE XXXVIII 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.
ARTICLE XXXIX 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.
