EXHIBIT 10.11
RESEARCH AND DEVELOPMENT AGREEMENT
This Research and Development Agreement ("the Agreement") is entered into by and
between iTVr, Inc. ("iTVr"), a Delaware corporation, and Swan Magnetics, Inc.
("Swan"), a California corporation, as of November 15, 2000.
A. iTVr has developed certain technology for a device that is intended to
record, play back and time-shift certain broadband electronic
transmission events ("Broadband Internet Set Top Box" or "BISTB") such
as live television, video email, and music videos,
X. Xxxx wishes to help fund further development of the technology,
including the BISTB product having the specifications set forth in
Exhibit A.
C. The parties previously entered into a binding Letter of Intent, dated
November l0, 2000, regarding the same subject matter as this Agreement.
This Agreement is intended to supplement, not replace, the Letter of
Intent.
In consideration of the following, the parties agree to the following terms and
conditions:
1. INITIAL DEVELOPMENT FEE. Swan agrees to make available to iTVr a total
of $250,000 to continue development of the BISTB. This amount will be
paid in two or more installments at Swan's discretion between November
15, 2000 and December 31, 2000. It is anticipated that this funding
will allow iTVr to meet its employee payroll and otherwise to continue
developing the technology through at least December 31, 2000.
2. ADDITIONAL DEVELOPMENT FEE. The parties anticipate that Swan will make
an additional $500,000 available to iTVr in one or more installments,
starting on approximately January 12, 2000 to complete development of
the BISTB. Such funding shall be at Swan's discretion pursuant to terms
and conditions described more fully below in section 5.
3. SUBSEQUENT FINANCING. The parties agree that they shall each use
their best efforts to pursue Subsequent Financing of up to $2,000,000
after the payment of the Initial Development Fee the Additional
Development Fee.
4. CONVERSION OF DEVELOPMENT FEES. The parties agree that the payment of
the Initial Development Fee, the Additional Development Fee and any
Subsequent Financing shall be convertible, at the option of Swan for a
period of sixty (60) days after the completion of each development
phase, into the common stock of iTVr as follows:
a. The initial capitalization of iTVr shall be a total of
3,500,000 shares of common stock not inclusive of an employee
stock option plan of 2,000,000 shares of common stock.
b. The initial Development Fee of $250,000 shall be convertible
into 2,000,000 shares of common stock of iTVr, at the time of
conversion, as Swan may elect.
c. The Additional Development Fee of $500,000 shall be
convertible into an additional 1,000,00 shares of common stock
of iTVr, at the time of conversion, as Swan may elect and a
warrant to purchase an addition 1,000,000 shares if an
additional investment of at least $2,000,000 is arranged as
set forth in section d below.
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d. The Subsequent Financing of $2,000,000 shall be convertible
into 2,500,000 shares of common stock of iTVr, at the time of
conversion, as the investor of the Subsequent Financing may
elect.
5. DEVELOPMENT WORK. iTVr agrees to perform development work on the
technology and to use its best efforts to complete the BISTB within a
reasonable time and to deliver to Swan the deliverables as set forth in
Section 6, below. The BISTB developed by iTVr shall conform to the
specifications attached hereto as Exhibit A unless the parties agree in
writing to modify or revise the specifications. Except as set forth
elsewhere in this Agreement, iTVr shall be responsible for and bear all
personnel, materials and equipment costs incurred by it in connection
with performance of the development work.
6. INITIAL -DELIVERABLES. On or before December 31, 2000, iTVr shall
deliver to Swan the following Initial Deliverables:
a. Two (2) Physical Demonstration Units. At least two (2) working BISTB
devices, i.e., devices that are able:
i. To record and play live broadband electronic
transmission events or transmissions from A DVD
("Digital Video Disk"), such as live television
events, video e-mail and music videos, in which both
audio and video signals are recorded on a Hard Disk
Drive ("HDD").
ii. To time shift the data stream from the video. The
device shall include time shift functions that will
be operable and displayed on the device are: Play and
Record, Rewind, Stop Motion, Fast Forward, and
Frame-by-Frame.
iii. To display and operate the device with a fully
operational menu driven internet browser.
iv. To have the Video perform at variable bit rate with
DVD quality.
v. To be able, but not required, to will use as
fundamental platforms, Wind River's Vx works as OS
and C-cube C-xxxx, which technologies are
non-transferable.) The mechanical enclosure will not
include a fan, and will operate at low temperature
and be shock resilient. The primary HDD will be a
fixed HDD, although a design for a removable HDD will
be prepared for the next phase. The screen
GraphicsUser Interface (GUI) will be controlled by an
Infra-Red remote.
b. The physical deliverables will consist of the following Hardware:
i. Two (2) boards working at these levels;
ii. Two (2) mechanical systems acting as an enclosure and
having capability to be used by a TV with NTSC
system; and
iii. Two (2) Infra-Red remote systems to interact with
these functions.
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c. The software deliverables will consist of the following Software
items:
i. Copies of all developed, non-licensed software;
operational user interface software;
ii. Internet browser software.
d. The documentation deliverables will consist of the following
documentation:
i. Schematics;
ii. Xxxx of materials;
iii. Mechanical drawings;
iv. Specifications; and
v. Product Requirements documents.
7. EVALUATION AND SUBSEQUENT DELIVERABLES. Upon receipt of the initial
deliverables, Swan shall conduct an engineering evaluation of the
BISTB. Based on its evaluation and in its sole discretion, Swan will
decide whether or not proceed to the next phase of the development,
including whether to provide additional funding. The parties shall
attempt to agree on the delivery schedule and deliverable items for
future delivery, if any.
8. USE OF INITIAL PAYMENT. iTVr agrees to use the initial payment to fund
its development of the BISTB and for no other purpose. iTVr shall give
priority to labor/engineering expenses, materials costs and equipment
costs. The parties understand that certain licenses may be purchased
with some of the initial payment, but only upon the mutual agreement of
the parties.
9. SWAN'S DEVELOPMENT OBLIGATIONS. Swan agrees to make its physical
facilities available to iTVr to use in developing the BISTB. Swan also
agrees to use commercially reasonable efforts to arrange for iTVr
(and/or its employees) to be employed, and/or to have their payroll
administered through, the Professional Employment Organization
operations of Swan's affiliates, such as Internet Venture Group, Inc.,
Swan's parent company. Except for these items, Swan shall have no
obligations to support or participate in the development of the BISTB.
10. OWNERSHIP OF INTELLECTUAL PROPERTY. The parties agree that the Project
Technology for the BISTB shall be jointly owned by iTVr and Swan. For
purposes of this Agreement, such technology means any inventions,
technical know-how, or proprietary information that is developed by or
on behalf of iTVr during the BISTD development project, including all
technology developed before this Agreement is entered into. Such
technology does not include any licenses used by or granted to iTVr or
any third party's technology.
11. BOARD OF DIRECTORS OF ITVR. The parties agree that the initial board
of directors of iTVr shall consist of three (3) members, two (2)
appointed by iTVr and one (1) appointed by Swan and shall serve for an
initial term of one (1) year. Upon payment of the Additional
Development Fee, Swan shall have the right to appoint one (1)
additional member. Upon funding of the Subsequent Financing, the
investing party shall have the right to appoint one (1) additional
member to the board of directors.
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12. REPRESENTATION AND WARRANTY. iTVr hereby represents and warrants that
it is the sole developer and owner of the BISTB technology and that it
has not assigned, transferred, or encumbered such any interest in such
product or technology.
13. NO LICENSSES. This Agreement does not attempt to grant or transfer any
license rights from or to either party. The parties have discussed and
understand that certain license rights held by one party or the other
may be necessary to the commercialization of the BISTB and that the
parties may need to negotiate for the transfer of license rights before
the BISTB development is completed.
14. TERM AND TERMINATION. This Agreement shall commence on the effective
date set forth above and shall remain in full force and effect until it
expires or is terminated. Swan shall have the right to terminate this
Agreement for convenience by giving 30 days written notice to Aura. In
addition, either party may terminate this Agreement for cause based on
a material breach of the terms of this Agreement. Specifically, this
Agreement shall automatically terminate if a party materially breaches
this Agreement and fails to cure that breach within 30 days after
receiving written notice to cure from the other party
15. CONTROLLING LAW. This Agreement and the performance of the parties
shall be construed in accordance with, and governed by, the laws of the
State of California.
16. AMENDMENT. This Agreement may be amended, modified or supplemented
only by a writing that specifically refers to this Agreement and signed
by authorized representatives of both parties.
17. NOTICES. All notices allowed by this Agreement shall be deemed given
when sent by confirmed facsimile and/or telecopy or upon receipt by the
other party if sent by some other means.
18. COUNTERPARTS. This Agreement may be signed in one or more
counterparts.
Executed this 27th day of November, 2000 by and between.
For iTVr by:
/S/ XXXX XXXXX
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Xx. Xxxx Xxxxx
iTVr, Inc.
For Swan Magnetics, Inc. by:
/S/ XXXX XXX
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C. Xxx
Xxxx Magnetics, Inc.
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