Exhibit 10(ff)
AGREEMENT
This Agreement, dated as of July 30, 2004 between LightSpeed Networks, Inc.
("LightSpeed"), a New York corporation having a place of business as 00 Xxxx
Xxx, Xxxxxxxxx, XX 00000, and NCT Group, Inc. ("NCT"), a Delaware corporation
and having a place of business at 00 Xxxxxxx Xxxxxx, Xxxxxxxx, XX 00000,
describes the arrangements, terms and conditions under which both LightSpeed and
NCT agree to proceed.
"NCT," as used in this Agreement shall mean NCT Group, Inc. and its affiliates,
direct and indirect subsidiaries and the successors-in-interest of any thereof;
provided, however, that (a) as to stock options and compensation obligations in
Sections 4 and 5 hereof, "NCT" shall mean only NCT Group, Inc.; and (b) if
Artera Group, Inc. ("Artera"), which is currently a subsidiary of NCT Group,
Inc., is no longer an affiliate or direct or indirect subsidiary of NCT Group,
Inc. (an "Artera Spin-Off"), this Agreement, as it relates to Artera, shall
automatically become an agreement between Artera and LightSpeed, with references
herein to "NCT" being deemed references to "Artera," with obligations arising
under this Agreement prior to the Artera Spin-Off Date that relate to Artera
becoming obligations solely of Artera and with Artera's address and fax number
for notices under this Agreement being those of Artera's principal place of
business immediately following the Artera Spin-Off. In such event, however, this
Agreement as it relates to NCT Group, Inc. and its affiliates and direct and
indirect subsidiaries other than Artera would remain in effect.
1. Duties of LightSpeed: LightSpeed will provide such consulting services and
advice pertaining to NCT's business affairs as NCT may from time to time
reasonably request. Without limiting the generality of the foregoing,
LightSpeed will assist NCT, and in particular Artera, in establishing
distribution agreements, large end user sales, resellers, capital, funding,
and joint venture partners and in maintaining Artera's relationship with
Avaya Inc. and its subsidiaries (as applicable, "Avaya").
2. Term of Agreement: The initial term of this Agreement shall be from the
date hereof to July 30, 2006, but will automatically be extended beyond the
expiration of such initial term for additional consecutive one (1) year
terms upon the anniversary of the commencement of each one (1) year term
unless terminated by either party upon written notice to the other no less
than ninety (90) days, prior to the expiration of each respective term. In
addition, either party may terminate this Agreement upon twenty (20) days'
prior written notice to the other party for the material breach of this
Agreement by such other party not cured by the end of the notice period,
and NCT may terminate this Agreement upon ten (10) days' prior written
notice to LightSpeed in the event that Xxxxxxxx X. Xxxxxx, the current
President of LightSpeed ("Charry"), is no longer an officer or employee of
LightSpeed or otherwise performing under this Agreement on its behalf.
Termination shall in no way affect transactions already completed for which
compensation is due to LightSpeed as described in Section 5 below.
3. Time and Non-Compete: LightSpeed shall make available such time as it, in
its sole discretion, shall deem appropriate for the performance of its
obligations under this Agreement. NCT acknowledges that LightSpeed or its
employees may perform services for other companies, except that it and they
may not do so for companies that directly compete with NCT (including its
subsidiaries) at the time.
4. Charry Stock Options: For the benefit of LightSpeed, with respect to all
options to purchase shares of common stock of NCT that were owned by Charry
as of April 30, 2004 (the date as of which Charry resigned as an employee
of NCT, referred to herein as the "Resignation Date"), subject to approval
or ratification by the Board of Directors or Compensation Committee of NCT,
(a) for any options that would otherwise have expired automatically three
(3) months after the Resignation Date, NCT shall be deemed to have waived
such automatic expiration; and (b) any options (including those described
in clause (a) above) that are not vested as of the date hereof shall be
deemed vested as of the date hereof.
5. Compensation: As compensation for LightSpeed's services hereunder, NCT
shall promptly pay to LightSpeed the following:
(a) Raising Capital and Debt: A fee shall be paid to LightSpeed of 5% of
the equity capital and 1% for debt obligations raised for NCT from
those parties listed as "Investors" on Schedule A attached hereto.
LightSpeed will also receive five-year warrants, exercisable as of the
date of issuance, to purchase an amount of equity in NCT equal to 5%
of the equity sold, at the same price as the equity sold. "Equity
capital," as used herein, shall include funds used to purchase (i)
debt obligations that are convertible into equity, (ii) obligations or
equity containing "put" options, (iii) preferred stock of any nature
and (iv) any other NCT obligations in which the holder has a right to
acquire an equity interest in NCT.
(b) Licensing and Distribution Fees: A fee shall be paid to LightSpeed of
5% of the gross revenues received by NCT, when received, under any
licensing and/or distribution agreements between NCT and those parties
listed on Schedule A attached ---------- hereto as "Business Targets."
"Gross revenues," as used herein, shall mean all revenues received by
NCT under a licensing and/or distribution agreement between NCT and a
Business Target. The 5% fee, as discussed above, shall be paid for a
period of three (3) years from the date that gross revenues are first
received by NCT from each Business Target, and thereafter, the fee
shall be 3% of gross revenues from such Business Targets.
Notwithstanding the foregoing, with respect to licensing and
distribution of Artera's electronic data transmission optimization
products, LightSpeed's right to compensation under this Section 5(b)
shall be limited to Artera's residential and small business versions
of its Artera Turbo product unless Artera expressly otherwise agrees
in writing with respect to a specified Business Target.
(c) Licensing and Distribution Fees for Avaya: A fee shall be paid to
LightSpeed of 2% of the gross revenues received by NCT, when received,
from Avaya.
(d) Joint Venture Income: In the event NCT enters into a joint venture,
partnership or other business relationship with any Investor or
Business Target that results in gross revenues being paid to NCT,
LightSpeed will receive a fee of 5% of said gross revenues received,
when received, that result from the aforementioned. The 5% fee, as
discussed above, shall be paid for a period of three (3) years from
the date that gross revenues are first received by NCT from each
Investor or Business Target and
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thereafter, the fee shall be 3% of gross revenues from such Investors
and Business Targets.
(e) Sale of NCT: In the event any Investor or Business Target purchases
all or a majority interest of NCT Group, Inc. or its assets,
LightSpeed shall receive 6% of such purchase price. "Purchase price,"
as used herein, shall mean any compensation of any nature received by
NCT or its shareholders from such transaction, including any legal,
beneficial or equitable interest in a business such as stock, stock
options, partnership interests, membership interests, beneficial trust
interests and similar types of interests, as well as any deferred
compensation when received.
(f) Adding and Deleting from Schedules: A prospective investor or business
target shall be added to Schedule A as an "Investor" or "Business
Target" only with written consent from NCT. Any such prospect may be
removed from Schedule A by NCT via written notice to LightSpeed if
LightSpeed does not enter into a business relationship with NCT within
three (3) months of its addition to Schedule A. If in NCT's opinion
reasonable progress is being made towards entering into a business
relationship, NCT shall refrain from sending such removal notice until
such time as the prospect is deemed by NCT to be inactive.
(g) Equity: LightSpeed may request any of the above-described fees as
equity in NCT instead of cash. NCT at its sole discretion may decide
to honor the request. If NCT decides to honor the request, the price
of the equity will be mutually agreed upon by the parties at the time
of the request but in no event will such price be greater than the
price of the last capital infusion into NCT by an unaffiliated third
party in an amount of at least $1,000,000. LightSpeed and NCT may, on
a comparable basis, agree that LightSpeed will receive equity in any
joint venture or similar transaction referred to in this Section 5 in
lieu of all or part of the cash fee provided for herein.
(h) Waiver: Notwithstanding the foregoing provisions of this Section 5,
LightSpeed hereby irrevocably waives the first $421,500 in
compensation that may become due and payable to it under this Section
5. If any of such amount would have been payable in assets other than
cash (e.g., securities), such assets shall be valued, for purposes of
calculating the extent to which such waiver has been satisfied, at the
same valuation as in the NCT transaction to which such assets relate.
6. Expenses and Use of NCT Facilities: LightSpeed agrees that ordinary
expenses incurred by it in performing under this Agreement will be paid by
LightSpeed, except as agreed in advance in each instance by NCT and
LightSpeed. NCT shall permit Charry, acting on behalf of LightSpeed, use of
the NCT office facilities, including an office, computer (with e-mail and
Internet access capability), telephone, facsimile and use of NCT's support
personnel, for the purpose of performing services on behalf of LightSpeed
under this Agreement. LightSpeed shall ensure that Charry complies with all
building and equipment use policies applied generally by NCT or its
landlord.
7. Relationship: Nothing herein shall constitute LightSpeed as an employee or
agent of NCT (it being understood that LightSpeed will be an independent
contractor). Except to
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such extent as might hereinafter be expressly agreed for a particular
purpose. LightSpeed shall not have the authority to obligate or commit NCT
in any manner whatsoever.
8. Information: NCT acknowledges that LightSpeed will rely on information
furnished by NCT concerning NCT's business affairs without independent
certification and represents that such information will be materially
complete and correct.
9. Confidentiality: LightSpeed shall comply with the confidentiality rules set
forth in Schedule B attached hereto.
10. Indemnification: Each party hereto agrees to indemnify and hold harmless
the other party, its affiliates, partners, officers, directors, employees
and agents, and each person who controls any thereof, from and against any
losses, claims, damages, liabilities and expenses whatsoever (including
reasonable attorneys' fees, as incurred) (collectively, "Losses"), to which
they or any of them may become subject arising out of a breach of this
Agreement by the indemnifying party. In addition, NCT agrees to indemnify
and hold harmless LightSpeed, its affiliates, partners, officers,
directors, employees and agents, and each person who controls LightSpeed or
any thereof, from and against any Losses, to which they or any of them may
become subject arising out of LightSpeed's performance under this
Agreement, except as set forth above and except in the event of intentional
wrongdoing, bad faith or gross negligence by LightSpeed. LightSpeed agrees
to indemnify and hold harmless NCT, its affiliates, partners, officers,
directors, employees and agents, and each person who controls NCT or any
thereof, from and against any Losses, to which they or any of them may
become subject arising out of LightSpeed's or Charry's use of NCT's office
facilities as described in Section 6 hereof.
11. Assignment: This Agreement may not be assigned by LightSpeed without the
prior written consent of NCT.
12. Governing Law: This Agreement shall be deemed to be a contract made under
the laws of the State of Connecticut in the Untied States of America, and
for all purposes shall be construed in accordance with the laws of said
state and country.
13. Miscellaneous:
(a) NCT agrees to provide LightSpeed, in regard to any transaction that
does or might generate a right to compensation of LightSpeed under
Section 5 hereof, with a timely copy of all letters of intent, offers,
counter-offers, final agreements, closing statements and any other
information or materials which are or might be pertinent to
calculating such compensation.
(b) Each party represents and warrants to the other that it has the right
and power to enter into and perform this Agreement, and that entering
into and performing this Agreement do not and will not breach,
conflict with or constitute a default under any other agreement,
instrument or judicial or regulatory order to which such party is or
may become bound.
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(c) Each of the undersigned signatories, on behalf of NCT and LightSpeed,
respectively, represents and warrants that he or she has the authority
to execute and deliver this Agreement.
(d) No notices hereunder shall be effective unless in writing and
delivered by hand, by courier or facsimile, or mailed by certified
mail, postage prepaid, return receipt requested, and properly
addressed to the intended recipient as follows:
If to NCT: NCT Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Chief Financial Officer
Facsimile: 000-000-0000
If to LightSpeed: LightSpeed Networks, Inc.
00 Xxxx Xxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxx
Facsimile: 000-000-0000
Either party may change its address or facsimile number for notice via
a notice sent as aforesaid.
(e) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes any
and all other prior or contemporaneous written or oral agreements or
understandings between the parties with respect to such subject
matter.
(f) This Agreement may not be amended except by a written instrument
executed by both parties hereto.
AGREED AND ACCEPTED:
-------------------
NCT GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
Chairman & CEO
LIGHTSPEED NETWORKS, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxxx X. Xxxxxx
President
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The undersigned, Artera Group, Inc., a Delaware corporation, hereby accepts and
agrees to the provisions of the second introductory paragraph of the foregoing
Agreement.
ARTERA GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
Chairman & CEO
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SCHEDULE A
----------
Investors:
---------
Greenfield Capital
Xxxxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx
Soundview Partners
First American Financial
Xxxxxx Capital Partners
XX Xxxxxx
Deutsche Bank Securities
Business Targets:
----------------
Hydro Quebec
Con Edison
Manitoba Hydro
ABB
Ciba-Geigy
Alcatel
Alstom
Aventis
France Telecom
Xxxxxxxxx
Akzo Nobel
Sydkraft
Vattenfall
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SCHEDULE B
----------
1. For purposes of this Agreement, "Confidential Information" shall mean all
information disclosed by NCT to LightSpeed that relates in any way to NCT
or NCT's business, operations, properties or finances. However,
Confidential Information does not include information that (a) is or
becomes generally available to the public through no fault of LightSpeed,
(b) was transmitted to LightSpeed by an entity other than NCT that to
LightSpeed's knowledge is not bound by a confidentiality obligation to NCT
and is not prohibited from transmitting the information to LightSpeed, (c)
was already in LightSpeed's possession prior to receipt from NCT or (d) was
independently developed by LightSpeed without reliance on Confidential
Information.
2. LightSpeed will not, without NCT's prior written consent, divulge
Confidential Information to any third parties except LightSpeed's
authorized representatives on a need to know basis in connection with
LightSpeed's interest in a possible business transaction, relationship or
arrangement with, or investment in, NCT.
3. LightSpeed acknowledges that any unauthorized use or disclosure of
Confidential Information will constitute a material breach of this
Agreement and would cause damage to NCT for which LightSpeed would be
responsible.
4. LightSpeed will promptly return to NCT or destroy all Confidential
Information, plus all notes and derivative documents, at the time of any
such request by NCT to do so and will make no further use of Confidential
Information thereafter.
5. All Confidential Information supplied under this Agreement is delivered on
an "as is" basis, with no warranty as to accuracy or suitability for any
particular use.
6. The obligations in this Schedule B shall survive the expiration or any
termination of this Agreement for a period of five (5) years.
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