August 20, 2015

 

 

 

Walter Geldenhuys, CEO

Advanced Voice Recognition Systems, Inc.

7659 E. Wood Drive

Scottsdale, AZ 85260

 

Re: Advisory Services

 

Dear Mr. Geldenhuys,

 

This letter agreement (“Agreement”) confirms the agreement of Advanced Voice
Recognition Systems, Inc., a Corporation organized under the laws of the state
of Nevada, with a principal place of business at 7659 E. Wood Drive, Scottsdale,
AZ 85260 (the “Company”) to engage Dominion Harbor Group, LLC (“Dominion”) to
provide specified services to the Company on the following terms and conditions:

 

RESPONSIBILITIES

 

 1. Dominion.
    a. Dominion will provide strategic advisory services to fund and support all
       pre-approved and necessary actions to support the common goal of, without
       limitation, the acquisition, sale, licensing, prosecution, enforcement,
       and settlement with respect to the intellectual property of the Company,
       including without limitation, the patents identified in Exhibit A (the
       “IP Rights” and the “Services” respectively). Services will additionally
       include valuation support, technical assistance including the generation
       of market relevancy documentation to support licensing efforts and
       post-grant review support if necessary.
    b. Dominion will recommend the acquisition of certain patents and/or patent
       portfolios by Company from time to time (“Acquired Patents”).  With the
       approval of the Company, Dominion will provide access to financing to
       Company for the acquisition of any Acquired Patents and Dominion will
       provide Services for Acquired Patents as set forth in this Agreement.
       Purchase price of Acquired Patents will be considered as included in
       Advanced Costs as defined below.
    c. Dominion will introduce the Company to individuals and entities that may
       act as counsel, consultants, vendors and experts relating to the Services
       and that may provide financing therefor.  Dominion or its affiliates may
       have existing relationships with these entities and individuals. 
       Dominion is not impartial in recommending entities and individuals that
       Dominion believes provide superior service. Dominion further represents
       and acknowledges that it has no ownership interests in these entities and
       none of these existing relationships present any conflicts of interests.
    d. Dominion will provide Company with regular updates, at least every thirty
       (30) days regarding the status, among other things, a summary of efforts
       related to the monetization of IP Rights, Advanced Costs incurred and
       current and anticipated entities that Dominion intends to approach.
    e. The Services will be provided by Dominion from such locations, and at
       such times, as Dominion shall reasonably determine.  Dominion agrees to
       provide the Services to the best of its reasonable abilities, but
       guarantees no particular outcome.
    f. Dominion will provide additional services as may be reasonably requested
       by the Company and approved by Dominion.
    g. Dominion will act as an independent contractor, and is not a fiduciary
       for the Company.

 

 2. The Company.
    a. Dominion will advise and make recommendations regarding monetization
       strategy, service providers, law firms, funding and other related
       matters, but decision-making and final approval rests solely with the
       Company.  Dominion is not affiliated with the Company and does not
       directly or indirectly control the Company.
    b. Dominion is not a law or accounting firm, or a tax advisor, and the
       Company will not rely on Dominion to provide any such advice or services,
       but will seek separate legal, accounting, tax and other similar advice
       and services at the Company’s its discretion.
    c. The Company identifies Walter Geldenhuys (the “Company Designee”) as the
       point of contact for Dominion.  Dominion will exclusively report to and
       coordinate with the Company Designee and may rely on him/her as the
       official spokesperson and authorized officer of the Company, with full
       authority to bind the Company.  The Company Designee may be changed by
       written notice.
    d. The Company will cooperate with Dominion so that the Services may be
       performed in an efficient and prompt manner.
    e. The Company will promptly inform Dominion of any relevant information
       relating to the IP Rights including, but not limited to prosecution
       matters, prior licensing discussions or any other potential matters
       regarding IP Rights.
    f. The Company will retain full, clear, and exclusive title to the IP
       Rights, free and clear of any liens, pledges, encumbrances or any other
       third party rights, except as discussed, recommended by Dominion in
       writing, and ultimately approved in writing by Company in connection with
       the monetization activities conducted in connection with the Services
       referenced in 1A.
    g. In the event of a transfer, sale, exchange, acquisition, or other event
       impacting title to the IP Rights (including a change of control or sale
       of the Company) (a “Transfer”), which Transfer was not discussed with or
       recommended by Dominion in writing, the Company shall offer an entity
       designated by Dominion an opportunity to conduct the Transfer on
       substantially similar terms, and shall hold such offer open for a period
       of twenty (20) business days.
    h. The Company has full right to monetize IP Rights against companies that
       Dominion does not intend to contact (an “Excluded Entity”).  To the
       extent that the Company identifies an entity that it believes may be an
       Excluded Entity it shall identify such entity in writing to Dominion and
       Dominion shall have ten (10) days to confirm if such entity is an
       Excluded Entity.  Upon Dominion’s confirmation, in the event of Company
       generating proceeds from any such Excluded Entity separate from Dominion
       Services, no payment is due from Company to Dominion.

 

 3. Both Dominion and the Company
    a. Dominion and the Company will act in a reasonable manner so as to
       preserve the other’s goodwill and reputation.
    b. Neither Dominion nor the Company will undertake actions intended to
       circumvent this Agreement.
    c. Both Dominion and the Company will take reasonable actions to preserve
       the confidential nature of any information exchanged during the course of
       this Agreement.
    d. Both Dominion and the Company will maintain records (including financial
       records) sufficient to determine their respective rights and obligations
       under this Agreement, and will make such records available promptly upon
       written request.

 

COSTS AND EXPENSES

 

 4. Payable by Dominion
    a. Dominion will pay all of its own travel, lodging, copying, fax, telephone
       and other ordinary business expenses incurred by Dominion in connection
       with this Agreement.
    b. Dominion shall pay all costs and expenses recommended by it and approved
       by the Company in connection with the Services (the “Advanced Costs”). 
       Advanced Costs shall include, for example, court filing fees, discovery
       costs, expert fees, deposition costs, graphics vendors, patent
       prosecution costs (including maintenance fees, continuation practice,
       post-grant proceedings at the USPTO, and fees resulting from Company’s
       patent prosecution counsel as deemed necessary and requested by Dominion)
       and other litigation-related expenses.  Aggregate Advanced Costs shall be
       Ten Million Dollars ($10,000,000), unless otherwise agreed on by both
       Dominion and Company. 
    c. 

 

 5. Payable by the Company
    a. The Company will pay all of its own travel, lodging, copying, fax,
       telephone and other ordinary business expenses incurred by the Company in
       connection with this Agreement, unless otherwise agreed upon by Dominion.
    b. The Company will be responsible and shall pay for any costs and expenses
       not deemed Advanced Costs, such as third party costs and expenses not
       recommended by Dominion.
    c. Except for Advanced Costs paid by Dominion in 4B, the Company will be
       responsible and shall pay for any contingency payments agreed upon
       between the Company and law firm(s) it undertakes in connection with
       monetization of the IP Rights. If there is litigation involving the IP
       Rights, it is possible that the Court might award sanctions, fees, or
       costs against the Company, all of which are the responsibility of and
       shall be borne by the Company unless otherwise covered by the law firm or
       other parties involved in Services (other than Dominion).

 

COMPENSATION

 

 6. Dominion Fee.  The Company agrees to pay Dominion 42.5% of the Net
    Consideration for the Services; provided however that to the extent that any
    proceeds are generated between the Company and companies agreed upon by
    Company and Dominion outside of litigation then Dominion would be entitled
    to 35% of the Net Consideration.  

 

“Net Consideration” means the gross amount of any consideration (gross being
defined as proceeds received prior to any deductions or reductions) collected by
or made available to the Company in connection with Monetization Event related
to the IP Rights, generated from the Services during the term of this Agreement
including without limitation, any licensing fee, litigation settlement fee,
payment of damages or other remedies, sale or other transaction payment, and any
other consideration, assets and proceeds payable to the Company (each a
“Monetization Event”) net of any contingency fees of counsel and of any Advanced
Costs.

 

 7. Order of Payment/ Distribution of Consideration from the IP Rights: As
    consideration for Dominion to enter into this Agreement and to provide the
    Services, the Company shall, with respect to any Monetization Event (as that
    term is defined above), make payments in the following order:

                 

 a. First, repayment of Advanced Costs;

 

 b. Second, fees of litigation counsel approved and engaged by Client on a
    contingency basis (“Litigation Counsel”) with such fees, unless otherwise
    agreed upon, not to exceed twenty-percent (20%) of the Gross Consideration
    and which Litigation Counsel was introduced to and engaged by the Company
    per the recommendation of Dominion (the “Litigation Counsel Fee”); and

 

 c. Third, the Dominion Fee.

 

 d. Fourth, all remaining portion of Gross Consideration will be available to
    Company.

 

For the avoidance of doubt, the Company and Dominion agree that the Advanced
Costs, the Litigation Counsel Fee, and the Dominion Fee will be solely paid from
proceeds from Monetization Events. Further, the Company and Dominion agree that
if no proceeds are generated related to the IP Rights under this Agreement, then
the Company will not be responsible for the payment of any Advanced Costs or any
Litigation Counsel Fee accrued under this Agreement.

 

 8. If the Company takes or fails to take any action the result of which could
    adversely impact Dominion’s current or future ability to collect payment
    that is due or may become due under the terms of this Agreement, the Company
    will enter into an amendment to the Agreement with Dominion (in a form
    reasonably acceptable to Dominion) to eliminate the adverse impact of such
    action or failure to take action. For the avoidance of doubt, no liability
    will arise from Company not accepting Dominion’s proposals regarding
    Services or Monetization Event.

 

 9. Timing.  The Company shall wire the Dominion Fee within five (5) business
    days of the receipt of invoice from Dominion and funds clearing from
    Company’s financial institution.  If the Company receives non-cash
    consideration (e.g., stock), the Company and Dominion will cooperate to
    divide the non-cash consideration in a reasonably timely manner consistent
    with the fee table set forth above.  Any amounts that are not paid in a
    timely manner will bear interest at the lower of (i) 22% per annum and (ii)
    the maximum rate permitted by law.

 

Dominion’s wire information is: 

 

Bank:                          Chase

Account Name:        Dominion Harbor Group, LLC

Account #:                 496697876

Routing #:                 111000614

Bank Address:          8111 Preston Road, Dallas, TX 75225

 

TERMINATION

 

 10. Generally; Survival.  This Agreement will terminate one (1) year after the
     last-to-expire of the patents included within the definition of IP Rights
     unless earlier terminated by mutual written consent of the parties or as
     set forth in Sections 11 and 12.  Sections 9, 10, 12, 13 and 15-17 of this
     Agreement shall survive any termination of this Agreement and survive until
     the expiration of the applicable statute of limitations. All payment
     obligations due prior to the expiration or termination of this Agreement
     shall survive such expiration or termination for any reason whatsoever.

 

 11. Termination by Dominion.
     a. Dominion may terminate this Agreement in the event of a material breach
        by the Company that is not cured, if capable of being cured, within
        thirty (30) days of notice to the Company of the breach.  In the event
        of such a termination,

                                          i.    The Company will repay any
outstanding Advanced Costs within thirty (30) days of termination; and

                                        ii.    The Company will remain
responsible for and shall pay the Dominion Fee under and in accordance with this
Agreement.

Dominion may terminate this Agreement at its discretion upon fourteen (14) days
written notice to the Company.  In the event of such a termination, the Company
shall have no further payment obligation to Dominion under this Agreement.  

 

 12. Termination by the Company.
     a. The Company may terminate this Agreement in the event of a material
        breach by Dominion that is not cured, if capable of being cured, within
        thirty (30) days of notice to Dominion of the breach.  In the event of
        such a termination for material breach, the Company shall have no
        further payment obligation to Dominion under this Agreement. For
        purposes of this Section 12(a), examples (without limitation) of a
        material breach would include breaches of the responsibilities of
        Dominion to provide the Services as set forth in Section 1 and to
        provide access to Advanced Costs as set forth in Section 4.
     b. The Company may further terminate this agreement for cause in the event
        that Dominion has not met the following benchmarks:

                                          i.    Within three (3) months of the
Effective Date of this Agreement, Dominion shall have engaged at least one
potential licensee to the IP Rights in licensing discussions (e.g., entering
into a forbearance agreement prior to such discussions) and is in active
discussions regarding IP Rights or have proposed the initiation of at least one
action of patent infringement with respect to the IP Rights evidenced by
presenting proposals from at least two (2) law firms for representing Company
including time line for initiating at least one patent infringement action.

                                        ii.    If Dominion has ceased providing
approved Services (as evidenced by Dominion not supporting ongoing or pending
litigation or documented, active licensing negotiations) for at least ninety
(90) days and provided that Company is not in breach of this Agreement at such
time, then Company may terminate this Agreement, with thirty (30) calendar days
written notice, without any payment obligation, then or in the future, as
outlined in Sections 5 and 6.

 

REPRESENTATIONS AND WARRANTIES

 

 13. By the Company.  The Company represents and warrants that:
     a. It exclusively owns, and has full, clear and exclusive title to the IP
        Rights, free and clear of any liens, pledges, encumbrances or any other
        third party rights.
     b. It has disclosed to Dominion all prior attempts to enforce or monetize
        the IP Rights, whether through correspondence, litigation or otherwise.
     c. The IP Rights have never been held invalid or unenforceable.
     d. It has disclosed to Dominion all prior art it is aware of in connection
        with the IP Rights.
     e. All prior licenses, covenants, and other third party rights granted
        under the IP Rights are set forth on Exhibit B.

 

MISCELLANEOUS

 

 14. Common Interest.  From time to time, the parties may share information with
     each other that is covered by the attorney-client privilege, work product
     immunity, or other privileges and immunities.  This Agreement memorializes
     the parties’ understanding that any such communications are covered by a
     community of interest that exists between them with respect to the
     Services.  The parties intend that all applicable privileges and immunities
     have been, are, and will be preserved.

 

 15. Conflicts of Interest.  Dominion may in the future be engaged by other
     entities engaged in businesses similar to and competitive with the
     Company.  The Company has assessed the risks of these conflicts and
     potential conflicts and determined that the benefit of engaging an advisor
     with relevant experience outweighs the risks of these actual and potential
     conflicts. Dominion represents and acknowledges that it is not currently
     engaged by any entities that may potentially be approached with respect to
     IP Rights.

 

 16. Choice of Law.  This Agreement shall be governed by and construed under the
     laws of the State of Texas. Any disputes relating to or arising from this
     Agreement by or among the parties shall be resolved exclusively by
     arbitration to be conducted exclusively in Dallas, Texas, in accordance
     with the Commercial Rules of the American Arbitration Association.  Any
     court of competent jurisdiction shall be authorized to enforce the
     provisions of the previous sentence and enforce the remedies imposed by
     such arbitration.  The losing party in any action to adjudicate rights
     relating to this Agreement shall bear the costs of such action.

 

 17. Indemnification.  The Company shall indemnify, hold harmless and reimburse
     Dominion, its affiliates, directors, officers, controlling persons,
     employees, attorneys and agents (“Indemnified Persons”) against any and all
     claims, losses, damages, liabilities, expenses, costs, actions, joint or
     several, insofar as such claim, loss, damage, liability, expense or action
     arises out of the Company’s claims to the IP Rights, except such
     indemnification shall not be available if an Indemnified Person engaged in
     reckless or willful misconduct; or if an Indemnified Person fails to timely
     notify the Company of any claim or action, does not allow the Company to
     appoint counsel to defend such action or claim, or settles a claim or
     action without the Company’s written consent.

 

 18. Other
     a. There are no third-party beneficiaries under this Agreement.
     b. This Agreement shall be binding on and inure to the benefit of the
        Company and Dominion, and their respective successors, assigns, heirs
        and representatives. This Agreement may only be modified or amended by a
        written agreement signed by both parties.
     c. This Agreement constitutes the entire agreement between the parties and
        supersedes any prior written or oral agreements or understandings
        between the parties hereto.  No oral explanation or oral information by
        either party hereto shall alter the meaning or interpretation of this
        Agreement.
     d. In the event that a party executes this Agreement by an electronic or
        scanned signature, such electronic or scanned signature shall create a
        valid and binding obligation of the party executing the same with the
        same force and effect as if such electronic or scanned signature were an
        original signed signature.

 

******

 

 

 

 

 

 

If the foregoing correctly sets forth our understanding, please sign below and
return an executed copy of this Agreement to Dominion. We look forward to
working with you.

 

Regards,

 

DOMINION HARBOR GROUP, LLC

 

 

 

By:      ________________________

Duly Authorized

 

 

 

Accepted and Agreed to:

 

Advanced Voice Recognition Systems, Inc.

 

 

 

By:      _____________________________

Duly Authorized

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

IP Rights

 

 

Country

Application

Number

Patent

Number

Title

US

11/824794

7558730

Speech recognition and transcription among users having heterogeneous protocols

US

11/824794

7949534

Speech recognition and transcription among users having heterogeneous protocols

US

13/112137

8131557

Speech recognition and transcription among users having heterogeneous protocols

US

13/115105

8498871

Dynamic speech recognition and transcription among users having heterogeneous
protocols

US

13/928383

N/A

Speech recognition and transcription among users having heterogeneous protocols

US

13/928381

N/A

Speech recognition and transcription among users having heterogeneous protocols

US

08/556077

5,960,447

Word tagging and editing system for speech recognition

US

09/996849

N/A

Integrated system and method for electronic speech recognition and transcription

 

 

 

 

 

 

 

 

EXHIBIT B

 

Encumbrances

 

None