EXHIBIT 10.5

 

DEVELOPMENT AGREEMENT BETWEEN

AIRCOM PACIFIC, INC. ("AIRCOM")

AND

PRICEPLAY.COM, INC. ("PRICEPLAY")

 

This Agreement is made on February 10, 2015 (the "Effective Date"), between:

 

Aircom Pacific, Inc., a company incorporated under the laws of California
("Aircom") and Priceplay.com, Inc., a company incorporated under the laws of
Priceplay ("Priceplay");

 

WHEREAS:

 

(A) Aircom possess expertise and know-how relating to PICO projector and DLP
technology;

 

(B) Aircom has developed a concept design to apply PICO projector and DLP
technology on seats in airplanes to render a much larger display screen than
traditional LCD or LED screens (the "AirCinema Design Concept");

 

(C) Priceplay desires Aircom to develop commercially viable prototype seats
incorporating the AirCinema Design Concept, (hereinafter referred to as the
'Work''); and

 

(D) Aircom is willing to develop the Work under the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE the Parties hereto agree as follows:

 

1 DEFINITIONS

 

 

1.1 "Party or Parties" Aircom and Priceplay are referred to herein individually
as a "Party" and collectively as "Parties".

 

 

1.2 "Intellectual Property Rights" means patents, patent applications, utility
models, copyrights, trade secrets, "Know-How”, inventions, discoveries, ideas,
techniques, technical information, procedures, manufacturing or other processes
and software, design, trademarks, service marks, trade names or other
intellectual, industrial or intangible property of any nature.

 

 

1.3 "Work" refers to the airplane seat design and prototype incorporating the
AirCinema Design Concept to be developed in accordance with the terms and
conditions of this Agreement.

 

 

1.4 "Deliverables" shall mean any items developed in connection with this
Agreement which shall be delivered to Priceplay in accordance with the terms of
this Agreement.

 

 

1.5 "Completion" shall mean the conclusion of the Paris Air Show 2015 during
which the prototype AirCinema Work is displayed by Aircom.

 

 

1.6 "AirCinema Concept Design" shall mean the conceptual design of airplane
seats incorporating PICO projector and DLP technology.

 

 

1.7 "Development'' shall mean the development and other work to be performed by
Aircom or Priceplay hereunder.

 

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2 DEVELOPMENT

 

 

2.1 Aircom shall perform the Development using its commercially reasonable
efforts and with the reasonable degree of proficiency, skill, diligence and
accuracy and observing the professional standards. Aircom shall utilize the most
up to date state-of-the-art techniques available to Aircom. Aircom shall ensure
that the Development is performed in accordance with all applicable laws, rules
and regulations. Aircom shall be responsible for obtaining all necessary and
appropriate approvals from relevant authorities.

 

 

2.2 Aircom shall use the personnel of Aircom and its affiliates for performing
the Development. Aircom will also retain sub-contractors or other third parties
to perform the Development. Retaining sub-contractors or other third parties to
provide the Development shall in no way affect or diminish Aircom's
responsibilities under this Agreement and Aircom shall ensure that any such
sub-contractors or third parties abide by the terms of this Agreement.

 

 

2.3 The parties acknowledge that Aircom is negotiating a Master Design Services
Agreement and a related Statement of Work to engage Nonobject Inc., a California
corporation located in Palo Alto, California ("Nonobject"), to assist Aircom in
the Development. Nonobject's primary responsibility would be to render design of
seats that are compatible to the AirCinema Design Concept.

 

 

2.4 Aircom will work closely with Nonobject to fine tune the seat design and to
engage a model make to produce prototypes for exhibition at the Paris Air Show
scheduled during June 15 through June 21, 2015.

 

 

2.5 Aircom will be principally responsible for incorporating PICO projector and
DLP technology into the prototypes, including sourcing the light engines of the
projectors and all related hardware and software matters.

 

 

2.6 Aircom will be principally responsible for displaying the finished prototype
at the Paris Air show.

 

 

2.7 Priceplay shall be entitled to introduce modifications to the Development.
If any such modifications will have a material impact on the costs of the
Development, the Parties shall confer in good faith to adjust the Total
Development Fee (as defined below) and the payment schedule accordingly.

 

 

In the event that the Parties cannot agree on the price adjustment, Aircom shall
not be obligated to incorporate any such modifications.

 

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3 PRICING AND PAYMENT

 

 

3.1 

Priceplay agrees to pay Aircom a total, all inclusive fees of $600,000 (the
"Total Development Fee") to be paid in accordance with Paragraphs 3.2 and 3.3
below.

 

 

 

The Total Development Fee is derived based on the following budget:

  

Nonobject Design Fees

 

$ 300,000

 

Nonobject Expenses

 

$ 20,000

 

Prototype Production Costs

 

$ 120,000

 

Light Engine/ including development works

 

$ 10,000

 

Aircom Fees and Expenses (including all costs)

 

$ 15,0000

 

Total

 

$ 600,000

 

 

 

The Parties acknowledge and agree that the budget set forth above is the best
information available as of the date of this Agreement and the Parties agree
that the Total Development Fee of $600,000 shall be the final contract price so
long as none of the actual costs of any listed item vary from the budget amount
by more than the higher of 10% or $5,000. In the event that the actual costs of
any item vary from the budget amount by more than the higher of 10% or $5,000,
the Parties agree to confer in good faith to adjust the Total Development Fee.

 

 

 

Aircom shall be responsible to pay all subcontractors and all costs and expenses
incurred in developing the Work, including, without limitation, all costs
relating to the Paris Air Show.

 

 

3.2 Upon completion of the seat design and commencement of the production of
prototype product incorporating the Work, Priceplay shall pay to Aircom 90% of
the Total Development Fee.

 

 

3.3 On or before June 15, 2015 (the first day of the Paris Air Show), Priceplay
shall pay to Aircom the remaining 10% of the Total Development Fee.

 

 

3.4 Aircom shall bear the cost of any and all applicable taxes, including
profit, sales, use, excise or similar taxes. If, in accordance with any
applicable laws, any withholding or other similar tax is imposed by any public
authority on any amount to be remitted by Priceplay to Aircom, Priceplay shall
be entitled to deduct or cause the deduction of the amount of such taxes.

 

 

4 DISCLAIMER OF WARRANTIES

 

 

4.1 BECAUSE OF THE DEVELOPMENT OF THE WORK IS EXPERIMENTAL IN NATURE, THE WORK
AND ANY DELIVERABLES WILL BE DELIVERED TO PRICEPLAY "AS IS", WITHOUT ANY
WARRANTIES, EXPRESS, IMPLIED OR STATUTORY WHATSOEVER, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT.

 

 

5 CONFIDENTIAL INFORM ATION

 

 

5.1 Receipt of Confidential Information. Each party acknowledges that in
connection with this Agreement, it may receive confidential or proprietary
technical and business information and materials of the other party or the
agents or clients of the other party, including but not limited to
specifications, drawings, sketches, models, samples, data, computer programs,
reports. work product, documentation, source code or object code ("Confidential
Information"). The terms of this Agreement are deemed Confidential Information,
but either party shall have the right to disclose the terms of this Agreement to
attorneys, government agencies, financial advisors and potential investors,
provided such entity is under an obligation of confidentiality substantially
similar to this Section 5 with respect to the Confidential Information.

 

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5.2 Duty to Maintain Confidentiality. The receiving party agrees: (i) to hold
and maintain in strict confidence the Confidential Information of the disclosing
party and not to disclose it to any third party other than the receiving party's
employees and contractors who have a need to know and have executed
confidentiality agreements with the receiving party substantially similar to
this Section 6; (ii) to protect the Confidential Information of the disclosing
party from disclosure with the same degree of care the receiving party uses to
protect its own proprietary information similar in nature, but in no event less
than a reasonable degree of care; (iii) not to use any Confidential Information
of the disclosing party except as permitted by this Agreement; and (iv) to
return Confidential Information of the disclosing party promptly upon the
disclosing party's written request.

 

 

5.3 Exceptions. Confidential Information does not include any information that
(i) is or becomes part of the public domain through no fault of the receiving
party; (ii) is disclosed by the disclosing party to others without restriction
on its use and disclosure; (iii) becomes known to the receiving party without
restriction from a source other than the disclosing party who is not in breach
of a confidentiality agreement with the disclosing party; (iv) is disclosed by
the receiving party with the prior written permission of the disclosing party;
(v) is independently developed by the receiving party without reference to or
reliance on such Confidential Information; or (vi) is required by applicable law
or government regulation to be disclosed by the receiving party, provided the
receiving party gives the other party reasonable advance notice of such
disclosure.

 

 

5.4 Injunctive Relief. The parties acknowledge that any breach or threatened
breach of the obligations of confidentiality contained in this Section 5 may
cause substantial harm to the non-breaching party that may not be reasonably or
adequately compensated with monetary damages. Accordingly, the parties recognize
and consent to each party's right to seek injunctive relief in connection with
such breach or threatened breach, in addition to any other available remedies.

 

 

6 INTELLECTUAL PROPERTY RIGHTS

 

 

6.1 Ownership of Work. Subject to fulfillment of Priceplay's payment obligations
hereunder, the Parties shall jointly own all right, title and interest in and to
the Development and the Work delivered to Priceplay (but excluding any materials
provided by Aircom for incorporation into the Work. including the trademark
"AirCinema", which shall be the sole property of Aircom), together with any and
all copyrights, trademark rights, trade secret rights, inventions, patent rights
and design rights with respect thereto. whether registered or unregistered, and
including any application for registration for any of the foregoing (the "Joint
Intellectual Property Rights"). If, with respect to any particular results of
Work hereunder, Aircom cannot assign such joint right, title and interest to
Priceplay, then Aircom grants to Priceplay a worldwide, perpetual, irrevocable,
royalty-free, nonexclusive and non-assignable license, with right to reproduce,
create derivative works of, distribute, publicly perform and publicly display by
all means now known or later developed, such results.

 

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6.2 Retained Rights. Notwithstanding any other provision of this agreement,
Aircom shall retain all right, title and interest in and to, including any
Intellectual Property Rights with respect to (i) any deliverables not accepted
by Priceplay and any research, items and information created by Aircom or it
licensors prior to the Effective Date or independently of the Work (and any
derivative works, modifications and enhancements thereto), (ii) the AirCinema
Design Concept and the trademark "AirCinema" and (iii) any information, designs
or know-how which is created by Aircom in connection with the Work (or partially
in connection with the Work) and which is generally applicable, non-Priceplay
specific and represents materials or functionality already readily available to
the public (collectively, "Aircom Materials"). Subject to fulfillment of
Priceplay's payment obligations hereunder, Aircom hereby grants Client a
worldwide, perpetual, irrevocable, royalty-free, nonexclusive and non-assignable
license to use Aircom Materials solely as incorporated into the Deliverables
provided by Aircom for production, marketing and promotion of same.

 

 

6.3 Patents. Any patentable Joint Intellectual Property Right shall (unless any
co-owner decides not to participate in patenting) be applied for and taken out
in the joint names of the Parties, and the Parties shall make such arrangements
between them for the upkeep and abandonment of the patents. A non-patenting
co-owner shall be entitled to a non- exclusive, royalty-tree and non-assignable
license in relation to the patented invention but shall not be entitled to any
royalty income (including recovery from infringement) from third parties.

 

 

6.4 Assignment and Licensing of Joint Intellectual Property Rights. If any Party
wishes to grant a license of any Joint Intellectual Property Right to a third
party, it shall advise in advance in writing to the other Party, who must agree
with such license in writing, which agreement shall not be unreasonably
withheld. If both Parties agree to such license, a financial arrangement will be
made between them to take account of the respective contributions of the Parties
to the license. The restriction on assignment and licensing set forth in this
Paragraph 6.4 shall not be applicable to the commercial deployment of the Joint
Intellectual Property Rights as set forth in Paragraph 6.5 below.

 

 

6.5 Commercial Deployment of Joint Intellectual Property Rights. Either Party
shall be permitted to, directly or indirectly through an affiliate, use the
Joint Intellectual Property Rights to develop products or derivative works for
sale provided that the Party making use of the Joint Intellectual Property
Rights (the "Deploying Party") pays the other Party a royalty fee as follows:

 

 

 

(a)If Aircom is the Deploying Party, Aircom shall pay Priceplay a royalty fee
equal to (i) $200 per seat for the first 3,000 seats sold, and (ii) $50 per seat
thereafter; and

 

 

 

(b)If Priceplay is the Deploying Party, Priceplay shall pay Aircom a royalty fee
equal to (i) $0 per seat for the first 3,000 seats sold, and (ii) $50 per seat
thereafter.

 

 

 

The Deploying Party shall be permitted to deploy the Joint Intellectual Property
Rights in joint venture with a third party so long as the Deploying Party
actively participate in the activities of such joint venture (as opposed to a
mere licensing of the intellectual property rights, in which case, Paragraph 6.4
shall apply).

 

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6.6

Cooperation. Each Party hereby agrees to perform such acts, execute and deliver
such instruments and documents, and do all such other things as may be
reasonably necessary to evidence, perfect and enforce the rights of the Parties
stated in this Section 6. Except as and to the extent otherwise provided in this
Agreement, neither this Agreement nor the performance of Work hereunder shall
give either Party any ownership interest in or right to any Intellectual
Property Right held by the other Party.

 

 

6.7 Injunctive Relief. The Parties acknowledge that any breach or threatened
breach of the rights set forth in this Section 6 may cause substantial harm to
the non-breaching Party that may not be reasonably or adequately compensated
with monetary damages. Accordingly, the Parties recognize. and consent to each
Party's right to seek injunctive relief in connection with such breach or
threatened breach, in addition to any other available remedies.

 

 

7 TERM AND TERMINATION

 

 

7.1 This Agreement shall continue until the Completion is reached, or any
earlier termination date as per the provisions of this Agreement.

 

 

7.2 In the event that this Agreement is terminated, Aircom shall, subject to
Priceplay paying Aircom's compensation as per this Agreement provide free access
to Priceplay to obtain all relevant documentation, Deliverables and
specifications from Aircom free of charge, enabling Priceplay to obtain
alternative material for the Work from a third party. In such event it is
incumbent on Aircom to provide to Priceplay recommendations and technical
assistance in transferring the Work.

 

 

7.3 Notwithstanding any termination of this Agreement, Sections 5 (Confidential
Information), 6 (Intellectual Property Rights) and 8 (General Provisions) shall
survive termination of this Agreement. The termination or expiration of the term
of this Agreement shall in no event affect any Party's rights or obligations
that have been accrued prior to such termination or expiration.

 

 

7.4 In addition to any other provision for termination in this Agreement, this
Agreement may be terminated immediately by either Party in the event of the
occurrence of any of the following events by sending a written notice to the
other Party by registered mail, if the other party:

 

 

 

(a) continues in default of any obligation imposed on it herein for more than
thirty (30) days after written notice has been sent by registered mail to the
other Party;

 

 

 

(b) is subject to liquidation, reconstruction, composition or is the subject of
a petition for bankruptcy, or is otherwise unable to pay its debts.

 

 

 

(c) commits any act material and irreparable injury to goodwill or reputation of
the first Party or a fraud on or betrayal of confidence in or criminal act
against the first Party or disclosure or divulgence of the first Party's
confidential information.

 

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7.5 The right to terminate this Agreement shall be without prejudice to any
other right or remedy of either Party in respect of the breach concerned (if
any) or any other breach

 

 

7.6 Upon expiration or termination of this Agreement for any reason Aircom shall
immediately:

 

 

 

(a) provide a full account of its performance of the Development; and

 

 

 

(b) deliver any undelivered Deliverables to Priceplay.

 

8 GENERAL PROVISIONS

 

 

8.1 This Agreement may only be amended or modified in writing by representatives
of Aircom and Priceplay.

 

 

8.2 The rights and benefits of any Party under this Agreement shall not be
assigned, mortgaged, charged, transferred or otherwise disposed of without the
prior written consent of the other Party. Neither Party shall assign, transfer
or otherwise dispose of this Agreement in whole or in part or any right or
obligation thereunder to any individual, firm or corporation without the prior
consent of the other Party in writing.

 

 

8.3 Neither Party shall be entitled to compensation for indirect losses, such as
loss of profit, loss of use, or consequential loss.

 

 

8.4 Whenever this Agreement requires a notice to be sent to a Party, such
communication shall be in writing by registered letter or fax and confirmed by
registered letter, at the address given above. A notice shall be deemed to be
received seven days after the other Party has dispatched it by registered
letter.

 

 

8.5 In the event that one or more of the provisions hereof being subsequently
declared invalid or unenforceable by court or administrative decision, such
invalidity or unenforceability of any of the provisions shall not in any way
effect the validity or enforceability of any other provisions hereof except
those which the invalidated or unenforceable provisions comprise an integral
part of or are otherwise clearly inseparable from such provisions.

 

 

8.6 Any disputes arising out of or in connection with this Agreement are to be
resolved in the first instance by good faith discussions between the parties. If
the dispute fails to be resolved through consultations between the parties, then
the dispute shall be referred to and finally resolved by arbitration. The
arbitration proceedings shall be conducted in San Francisco. The arbitration
proceedings shall be conducted in the English language. The arbitral award shall
be final and binding on all Parties, and the Parties agree to be bound thereby
and to act accordingly. The costs of arbitration shall be borne by the losing
Party or Parties.

 

 

8.7 When any dispute occurs and when any dispute is under arbitration, except
for the matters under arbitration, the Parties shall continue to exercise their
other respective rights and fulfill their other respective obligations under
this Agreement

  

 

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