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Exhibit 10.2

SYZYGY LICENSING LLC – PARAMETRIC SOUND CORPORATION
LICENSE AND ROYALTY AGREEMENT

           THIS LICENSE AND ROYALTY AGREEMENT (“Agreement”) is made on the day
and year first written below by and between Syzygy Licensing, LLC, a Nevada
limited liability company having an address of 8617 Canyon View Drive, Las
Vegas, Nevada 89117 (“Licensor”) and Parametric Sound Corporation, a Nevada
corporation having a business address of 1941 Ramrod Avenue, Suite 100,
Henderson, Nevada 89014 (“Licensee”).  Licensor and Licensee are sometimes
collectively referred to herein as “the Parties.”

RECITALS

WHEREAS, Licensor has developed or owns certain technology relating to improved
systems and methods of processing media input to create parametric sound output
(the ”Technology”), and is the owner of certain intellectual property in
connection with this technology;

WHEREAS, Licensee desires to acquire, and Licensor desires to grant, on the
terms and conditions set forth in this Agreement, an exclusive, world-wide right
for Licensee to use, manufacture, have manufactured, sell, have sold, offer for
sale, distribute, import and/or export products incorporating the Technology in
and for any and all commercial purposes.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:

1.
DEFINITIONS

 

 
1.1
Intellectual Property shall include any pending patent applications or issued
patents, inventions, developments, improvements, specifications, trade secrets,
practices and procedures, and know-how owned by Syzygy that relate(s) to or
cover(s) the Technology.

 

 
1.2
Licensed Product(s) shall include any product that is covered by the
Intellectual Property.

 

 
1.3
Licensed Patents means the pending patent application identified in EXHIBIT A,
and any patent or patent applications related thereto, including any foreign and
non-provisional patents and patent applications relating thereto, and any
continuations, continuations-in-part, divisions, reissues, re-examinations, and
equivalent patents and patent applications relating to the non-provisional and
foreign patent applications and patents.

 

 
1.4
Improvements means any improvement, enhancement, alteration, or modification of
the Technology, whether invented or developed by Licensor or Licensee.  Licensor
shall own all rights in any Improvements developed to the Technology by either
party.  However, any such Improvements shall be licensed to Licensee in
accordance with the terms of this Agreement.

 

 
1.5
Confidential Information means all confidential information relating to and,
where applicable, including the Technology, including, but not limited to, any
and all information concerning products, trade secrets, inventions, discoveries,
designs, improvements, research, development, specifications, technical data,
market data, know-how, including information derived from reports,
investigations, research, works-in-progress, and all other information which may
be designated as confidential.

 

 
 

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1.6
Net Sales

 

 
1.6.1
Calculation of Licensee’s Net Sales.  Net Sales shall be defined as Licensee’s
gross receipts or revenue, computed on a cash basis, for each Licensed Product
that is sold, distributed, leased, or otherwise transferred for monetary payment
to any third party, less the following:

 

 
1.6.1.1
The actual cost of freight charges or of freight absorption, if any, separately
stated in such invoice;

 

 
1.6.1.2
Any trade, quantity or standard trade cash discounts, if any, allowed;

 

 
1.6.1.3
Any tax, duties, imposts or other government charge on the sale, transportation,
or delivery which is separately stated on the invoice (unless in the nature of a
value added tax, which need not be separately stated);

 

 
1.6.1.4
Any credit and cash refunds for returned goods; and

 

 
1.6.1.5
Any allowances for damaged, obsolete, and defective goods.

 

 
1.7
Valid Claim means (a) a claim in an issued and unexpired patent included in the
Licensed Patents that: (i) has not been held unenforceable, unpatentable or
invalid by a decision of a court or other governmental agency of competent
jurisdiction, and not subject to appeal, (ii) has not been admitted to be
invalid or unenforceable through reissue or disclaimer or otherwise, (iii) has
not been lost through an interference, reexamination or reissue proceeding; or
(b) a claim of a pending patent application included in the Licensed Patents.

 
2.
GRANT OF LICENSE.

 

 
2.1
Exclusive License.  Subject to all the terms and conditions of this Agreement,
Licensor hereby grants to Licensee an exclusive, worldwide license to use,
manufacture, have manufactured, sell, have sold, offer for sale, distribute, and
import and export the Licensed Products and all Improvements thereto in and for
all commercial purposes.

 

 
2.2
Trademarks, Trade Dress, and Copyrights.  Any trademarks or trade dress used by
Licensee in connection with the Licensed Products shall inure to the benefit of
Licensor.  Any copyrights created by Licensee in connection with the Licensed
Products shall be owned solely by Licensor.

 
3.
TERM AND TERMINATION

 

 
3.1
Term.  The term of this Agreement shall commence upon the formal separation of
Parametric Sound Corporation as an independent public entity distinct from and
no longer owned by LRAD Corporation (hereinafter referred to as the “Effective
Date”) and shall continue in force until twenty years from the Effective Date or
until the natural expiration of any patent containing a Valid Claim that covers
the Technology, whichever period is longer.

 

 
3.2
Licensor’s Option to Terminate or Renegotiate for Failure to Act.  Licensor
shall have the option to either renegotiate or terminate this Agreement at any
time during the Term should Licensee fail to use commercially reasonable efforts
to develop, manufacture, market and/or sell the Licensed Products only if such
failure continues following reasonably detailed written notice thereof by
Licensor to Licensee and a reasonable opportunity to cure.  The parties agree
that any previous license or assignment of any portion of the Technology from
Licensor to Licensee shall revert back to Licensor in the event of termination
of this Agreement.

 

 
 

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3.3
Default.  If either party commits any material default or breach with respect to
any of the provisions of this Agreement, or fails to account for or pay to the
other party any payment that becomes due hereunder, then the other party shall
have the right to terminate this agreement on 60 days' written notice to the
other party if the breaching party fails to cure such breach during the sixty
(60) day period.

 

 
3.4
Sale of Remaining Inventory upon Early Termination.  Upon termination of this
Agreement for any reason, Licensee shall provide Licensor with a written
inventory of all Licensed Products in the possession of Licensee, or its
sublicensees, or that are in the process of being manufactured.  Licensee, and
its sublicensees, shall be allowed a period of one (1) year to sell off or
otherwise dispose of its remaining inventory of Licensed Products, provided that
all Royalties under Section 4 are paid for Licensed Products sold or otherwise
disposed of to a third party.

 

 
3.5
Continuing Obligations after Termination.  Upon termination of this Agreement,
whether by default, cancellation, termination or normal expiration, Licensee
shall not be relieved of any duties or obligations to pay all amounts accrued
and due hereunder, and said amounts shall be payable at the effective date of
the termination.  In addition, Sections 1, 3.4, 3.5, 4, 6, 9, 10, 11, 12, 13,
14, 15, 16, 17, 18, and 19 of this Agreement, and any provisions that
specifically provide for survival, shall survive any termination of this
Agreement whether by default, cancelation, termination or normal expiration.

 
4.
ROYALTY, PAYMENTS, AND REPORTS

 

 
4.1
In consideration for the rights conveyed by this Agreement, Licensee shall pay
the following to Licensor:

 

 
4.1.1
Royalty – 5.0%. Licensee shall pay Licensor a royalty of five percent (5.0%) of
the Net Sales of Licensed Products which are either: i) sold or otherwise
transferred for monetary payment prior to four (4) years from the Effective Date
of this Agreement; or ii) are covered by a Valid Claim of a Licensed Patent
issued in a territory in which the Licensed Products are sold.

 

 
4.1.2
Royalty – 3.0%.  In the event that no patent covering a Licensed Product has
issued in a territory after four (4) years from the Effective Date of this
Agreement, Licensee shall pay Licensor a royalty of three percent (3.0%) of the
Net Sales of the Licensed Products in that territory. If a patent issues in a
territory after four (4) years from the Effective Date of this Agreement, the
royalty shall revert back to five percent (5.0%) of the Net Sales for Licensed
Products sold in that territory.

 

 
4.1.3
Reimbursement of Development Costs.  Licensee shall pay to Licensor its costs
incurred through the Effective Date in developing, testing and prototyping the
Technology.  These costs include, but are not limited to, time charged by Mr.
Elwood G. Norris at a rate of $100 per hour, limited to an aggregate of 250
hours prior to the Effective Date. After the Effective Date, Licensee shall bear
its own costs to develop, test, prototype, manufacture or otherwise use the
Technology as authorized herein and, other than those actions that are
reasonably necessary to convey any inventions, developments, improvements,
specifications, trade secrets, practices and procedures, and know-how required
by this Agreement, Licensor shall have no obligation to perform any such
activities or make any Improvements to the Technology. The parties acknowledge
that Licensee intends to employ Elwood G. Norris on or after the Effective Date.

 

 
 

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4.1.4
Patent Costs.  Licensee shall reimburse Licensor’s past costs, and shall be
responsible for reimbursing all of Licensors’ future costs, in filing for,
prosecuting and maintaining any of the Licensed Patents in the United States.
Licensee may request that Licensor file patent applications in additional
territories, in which case Licensee shall reimburse Licensor for all costs
associated therewith. Should Licensee not elect to request patent filings in
additional territories, Licensor may do so at its own expense, and Licensee
shall not be obligated to reimburse or otherwise pay for the costs associated
therewith.

 

 
4.1.5
Reasonableness of Royalty Rate.  The parties hereby agree that the Royalty
payments set forth in this Section represent the value of the licenses granted
hereunder for the right to use, manufacture, have manufactured, sell, have sold,
offer for sale, distribute, and import and export the Licensed Products and all
Improvements.  The parties further agree that any Licensed Patents covering the
Licensed Products have utility to Licensee both individually and in the
aggregate, and that it would be impracticable to identify each specific Licensed
Patent being used. The parties further agree that any Intellectual Property
other than patents covering the Licensed Products has utility to Licensee, and
that it would be impracticable to identify each specific type of Intellectual
Property being used. As such, the parties have elected to (and agree that it is
reasonable to) use the aggregate royalty rates provided for in this Section for
Licensee’s use of the Intellectual Property.

 

 
4.2
Quarterly Payments.  The Royalties set forth in this Section shall accrue on the
Net Sales made day-to-day, on a cash receipts basis, in each calendar
quarter.  On or before the thirtieth day following the end of a calendar quarter
(i.e. April 30th, July 30th, October 30th, and January 30th), Licensee shall
submit payment of all accrued royalties on the Net Sales made in that calendar
quarter.

 

 
4.3
Late Payments.  In the event that any payment due hereunder is not received by
Licensor within 10 days of the due date for said payment, then Licensor shall be
entitled to charge Licensee interest at the rate of five percent (5 %) per annum
on said payments accrued from the date such payment was due.

 

 
4.4
Quarterly Reports. Licensee shall provide Licensor with a quarterly report on or
before the thirtieth day following the end of a calendar quarter (i.e. April
30th, July 30th, October 30th, and January 30th) detailing the Net Sales made in
that calendar quarter.  This quarterly report shall include at least an
accounting of the Net Sales made, with any deductions therefore, and of all
payments due.

 

 
4.5
Records.  Licensee shall keep records for a reasonable period of time of the
Licensed Products manufactured, sold and distributed in sufficient detail to
enable the Royalty Payment and any other payments due to Licensor to be
determined.  In the event that Licensor disagrees with any such accounting,
Licensor or its designated representative shall have the right, upon reasonable
notice to Licensee, at Licensor’s expense and no more often than semi-annually
to review and inspect the books and records of Licensee relating to the sale and
distribution of the Licensed Products during normal business hours of Licensee
at the location where such books and records are maintained, but for no more
than the preceding two (2) years. In the event that any inspection by Licensor
discloses any deficiencies in payments made to Licensor, then Licensee shall pay
such additional amounts to Licensor within twenty (20) days following receipt of
written notice thereof, together with all documentation necessary to support
such additional payment by Licensee.  In the event that any such inspection
discloses an overpayment by Licensee, then Licensee shall be entitled to deduct
and offset any such overpayment from the subsequent amounts that become due.  In
the event that there are no such subsequent payments to become due, then
Licensor agrees to pay Licensee the full amount of any such overpayment within
twenty (20) days following receipt of written notice thereof from Licensor.

 

 
 

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4.6
Payment in U.S. Dollars.  All payments due hereunder shall be made in U.S.
Dollars.

 

 
4.7
Taxes.  Licensee will pay any taxes incurred by it due to the use, manufacture,
sale, distribution, or importation or exportation by Licensee of the Licensed
Products.

 
5.
FILING, PROSECUTION, MAINTENANCE AND ENFORCEMENT OF LICENSED PATENTS

 

 
5.1
Patent Protection Applied for by Licensor at Its Discretion.  Licensor may apply
for patent protection covering the Technology within the United States at its
sole discretion.  Should Licensor decide not to pursue patent protection in the
United States on any portion of the Technology, Licensee may request that
Licensor do so at Licensee’s expense.  Licensee may request that Licensor apply
for patent protection covering the Technology outside of the United States at
Licensee’s expense. Should Licensee elect not to apply for patent protection
outside the United States, then Licensor may apply for patent protection outside
the United States at Licensor’s expense.

 

 
5.2
Licensor to Own All Licensed Patents and Control Prosecution and Maintenance. 
All Licensed Patents shall be owned, prosecuted, controlled and maintained
solely by Licensor.

 

 
5.3
Licensor may Obtain Patent Protection on Licensee’s Improvements.  Licensor
shall be entitled to file patent protection on Licensee’s Improvements at
Licensor’s sole discretion.  Licensee agrees that its agents, principals and
employees will provide all reasonable assistance in drafting and prosecuting any
such patent, whether or not said agents, principals and employees are named as
inventors.  Licensee agrees that its agents, principals and employees will
execute all documents necessary to transfer ownership of all patents covering
the Technology to Licensor.  The costs for any such filings shall be governed by
the provisions of Section 4.1.4 of this Agreement.

 

 
5.4
Notification of Infringements of the Licensed Patents.  Licensor and Licensee
agree to notify each other in writing of any suspected infringement(s) of the
Licensed Patents and provide any evidence therefore.

 

 
5.5
Enforcement and Defense of Licensed Patents. The parties shall confer in good
faith regarding the enforcement or defense of any rights under the Licensed
Patents, including whether to institute suit for infringement and the strategy
for enforcing such rights.  Notwithstanding this cooperation, Licensee shall
bear the burden of enforcing the Licensed Patents in the United States and any
other territories in which it has elected to obtain patent protection to prevent
infringements thereof.  Licensee shall be solely responsible for all attorneys’
fees, costs, and other expenses incurred in the enforcement and defense of the
Licensed Patents in the United States and any other territories in which it has
elected to obtain patent protection.  Licensor shall also, at its option, have
the right to address infringements, institute suit, and join in any legal action
for the enforcement or defense of any rights under the Licensed Patents to the
extent that it affects Licensor’s rights or causes it damages within a
territory.

 

 
5.6
Marking of Licensed Products. Licensee shall comply with the legal standards and
requirements of the applicable country or territory for the marking of the
Licensed Products and their packaging with a notice of the Licensed Patents.

 

 
5.7
Ownership of Improvements.  Licensor shall own all Improvements made or
developed by Licensor or by Licensee.

 

 
 

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6.
INDEMNIFICATION

 

 
6.1
Licensee agrees to release, indemnify and hold harmless Licensor, its officers,
employees, and agents against any and all losses, expenses, claims, actions,
lawsuits, judgments and damages (including attorney’s fees through the appellate
level) which may be brought against either party, its officers, employees, and
agents as a result of or arising out of any claim of infringement with respect
to the use, manufacture, sale, distribution, or importation or exportation by
Licensee of the Licensed Products as they relate to the Licensed Patents. This
section shall continue after the termination of this Agreement.

 

 
6.2
Licensee agrees to release, indemnify and hold harmless Licensor, its officers,
employees, and agents against any and all losses, expenses, claims, actions,
lawsuits, judgments and damages (including attorney’s fees through the appellate
level) which may be brought against either party, its officers, employees, and
agents as a result of or arising out of any product liability claim with respect
to the use, manufacture, sale, distribution, or importation or exportation by
Licensee of the Licensed Products. This section shall continue after the
termination of this Agreement.

 
7.
SUBLICENSING

 

 
7.1
Licensee may not sublicense its rights under this Agreement unless it obtains
Licensor’s written permission to do so.  Any Licensed Products sold under such a
sublicense shall be subject to the provisions of Section 4 of this Agreement;
however the royalty rates of any such sublicense may differ from those
delineated in Section 4.  The parties agree to negotiate royalty rates of any
sublicense in good faith with the intent to provide for gross margins to
Licensee and Licensor comparable to those delineated in and/or being the
consequence of Section 4.

 
8.
ASSIGNMENT

 

 
8.1
Licensee may not sell, assign, or transfer its rights under this Agreement
unless Licensor provides written permission to do so.  Any entity that is the
beneficiary of a sale, assignment or transference of this Agreement shall be
subject to the provisions of Section 4 of this Agreement.

 
9.
CONFIDENTIALITY

 

 
9.1
Licensee and Licensor agree that at all times during the term of this Agreement,
any extensions thereof, and after termination of the Agreement, they will hold
in trust, keep confidential, and not disclose to any third party or make any use
or induce or assist others in the use or disclosure of Confidential Information,
except as provided for in this Agreement.  Notwithstanding the foregoing,
Licensee may disclose Licensor’s Confidential Information to its employees,
agents, contractors, and advisors who have a need to know such information; and
Licensor may disclose Licensee’s Confidential Information to its employees,
agents, contractors, and advisors who have a need to know such information.

 
10.
REPRESENTATIONS AND WARRANTIES OF LICENSOR:

 

 
10.1
Licensor makes no representations or warranties to Licensee relating to
patentability of the Technology, or potential infringement of any third-party
intellectual property that may occur by practicing the Technology.

 

 
 

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11.
GOVERNING LAW

 

 
11.1
This Agreement, and all matters relating hereto, including any matter or dispute
arising out of the Agreement, shall be interpreted, governed, and enforced
according to the laws of the United States of America and the State of Nevada,
where applicable, and the parties hereto consent to the jurisdiction of any
appropriate federal or state court in and for the State of Nevada to resolve
such disputes.

 
12.
ATTORNEYS’ FEES

 

 
12.1
In the event that any party hereto shall be in default or breach of this
Agreement, said party shall be liable to pay all reasonable attorneys’ fees,
court costs, and other related collection costs and expenses incurred by the
non-defaulting or non-breaching party in prosecuting its rights hereunder.

 
13.
BINDING EFFECT

 

 
13.1
This Agreement shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective heirs, legatees, agents, representatives,
officers, directors, successors and assigns.

 
14.
NO JOINT VENTURE

 

 
14.1
The parties hereto expressly disclaim and disavow any partnership, joint venture
or fiduciary status or relationship between them and expressly affirm that they
have entered into this Agreement as independent contractors and that the same is
in all respects an “arms-length” transaction.  No party shall be responsible in
any way for the debts or obligations of the other party, nor shall either party
have the power to obligate or bind the other party in any manner whatsoever.

 
15.
CAPTIONS

 

 
15.1
The captions and paragraph headings of this Agreement are solely for the
convenience of reference and shall not affect its interpretation.

 
16.
SEVERABILITY

 

 
16.1
The parties agree that if any part, term, or provision of this Agreement shall
be found illegal or in conflict with any valid controlling law, the validity of
the remaining provisions shall not be affected thereby.  In the event of the
legality of any provision of this Agreement is brought into question because of
a decision by a court of competent jurisdiction, the parties agree that either
the parties (by written amendment) or the court may narrow the provision in
question or delete it entirely so as to comply with the decision of said court.

 
17.
ENTIRE AGREEMENT

 

 
17.1
This Agreement expresses and contains the entire agreement between the parties
with respect to the subject matter hereof and supersedes and replaces any prior
agreements between the parties with respect thereto.  Except as expressly
provided in this Agreement, there are no agreements, understanding, inducements
or arrangements between the parties relating to the subject matter of this
Agreement.  No subsequent alteration, amendment, change or addition to this
agreement shall be binding upon either party unless reduced in writing and
signed by them.

 

 
 

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18.
PREPARATION OF AGREEMENT

 
 
18.1
The parties acknowledge and agree that they have both participated in the
preparation of this Agreement and, in the event that any question arises
regarding its interpretation, no presumption shall be drawn in favor of or
against any party hereto with respect to the drafting hereof.

 
19.
NOTICES

 
 
19.1
Any and all notices required or provided for hereunder shall be in writing and
shall be delivered, either in person or by certified mail, return receipt
requested, postage prepaid to the parties at the addresses set forth in the
preamble to this Agreement.  Each party may change the address at which they
receive notices by notifying the other parties in accordance with the provisions
of this Section.  All notices shall be deemed received upon actual receipt
thereof if delivered in person, or within forty-eight (48) hours following the
deposit hereof in the United States mail in accordance with the terms of this
Section.

 

           IN WITNESS WHEREOF, the parties have executed this Agreement and have
made it effective as of the day and year first written below.

Licensor:
 
 
By: /s/ JAMES A. BARNES
(signature)
 
Name:  JAMES A. BARNES
 
Title: MANAGER
 
Date: SEPTEMBER 27, 2010
 
 
 
 
 
Licensee:
 
 
By: /s/ ELWOOD G. NORRIS
(signature)
 
Name:  ELWOOD G. NORRIS
 
Title: PRESIDENT AND CEO
 
Date: SEPTEMBER 27, 2010

 
 

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EXHIBIT A – LICENSED PATENTS

Docket #  01184-001.PROV
IMPROVED PARAMETRIC TRANSDUCER AND SIGNAL PROCESSING SYSTEMS AND METHODS