Document:

parametricsound_8k-ex1002.htm

 

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.

 

  

  

  

	 	
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.

 

  

  

  

	 	
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.

 

  

  

  

	 	
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.

 

  

  

  

	 	
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.

 

  

  

  

	
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.

 

  

  

  

	
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.

 

  

  

  

	
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

  

  

  

EXHIBIT A – LICENSED PATENTS

	
Docket #  01184-001.PROV

	
IMPROVED PARAMETRIC TRANSDUCER AND SIGNAL PROCESSING SYSTEMS AND METHODSparametricsound_8k-ex1003.htm

 

Exhibit 10.3

 

LEASE AGREEMENT

THIS AGREEMENT OF LEASE made and entered into this, 1st day of July, 2010 by and between DAVRIC CORPORATION, a Nevada Corporation, hereinafter referred to as “Lessor” and Syzygy Licensing LLC, hereinafter referred to as “Lessee”.

WHEREAS, Lessor is the owner of office/warehouse building/s located at 1937 and 1941

Ramrod, Henderson, Nevada.

WHEREAS, Lessee desires to lease space within the said office/warehouse building;

1.  PREMISES.  Lessor hereby leases to Lessee and Lessee hereby leases from Lessor, for the term, at the rental, and upon the covenants and conditions hereinafter set forth, the premises consisting of an area approximately Four thousand five hundred (4,500) square feet in said office/warehouse building, whose common address is 1941 Ramrod #100, Henderson, Nevada  89014.

Lessee shall, at its own cost and expense, furnish and install, subject to Lessor’s approval as to design, style, quality, color, age and conditions, the necessary tenant improvements, the necessary fixtures, equipment and furnishings in the premises for the effective operation of its business.

2.  TERM.  The term of this lease shall begin as of the 1st day of  July, 2010 and shall continue for twelve (12) months unless sooner terminated as hereinafter provided.

3.  INTENTIONALLY LEFT BLANK

4.  POSSESSION AND USE.  Lessee shall occupy and use the demised premises during the term hereof for the purpose of  conducting any and all business relating to the manufacturing and assembly of electronic audio equipment.

5.  RENT.  Lessee shall pay rent as follows to Lessor, at 980 American Pacific Drive, Suite 111, Henderson, Nevada 89014, or such other place as the Lessor may from time to time designate by written notice:  $4,000 per month from July 1, 2010 through June 30, 2011.

The above rental structure shall be payable monthly in advance, on the first (1st) day of each calendar month.   In the event the monthly rent is not paid within fifteen (15) days, a five (5) percent penalty will be charged.

6.  SECURITY.  Waived by Lessor

7.  COVENANT TO OPERATE BUSINESS.  Lessee shall continuously occupy and use the premises and be open for business for the purpose specified herein.  This requirement shall not apply during times when the premises are untenantable by reason of fire or other casualty, however, Lessee shall continue the operation of its business to the extent reasonable practical from the standpoint of good business during any period of reconstruction or repair.

8.  LESSEE’S TAXES.  Lessee shall pay all taxes levied on sales, payrolls, inventory, personal property and business or Lessee, and all other taxes pertaining to Lessee’s business activities.

9.  INSURANCE.  Lessee shall, during the entire term at Lessee’s sole cost and expense, keep in force by advance payment of premium, property damage insurance in the amount of not less than $50,000.00 and casualty insurance in the amount of not less than $1,000,000.00 for injury to or death of one person as a result of one occurrence, and not less than $1,000,000.00 per injury to or death of more than one person as a result of one occurrence, insuring Lessee against any liability that may accrue against Lessee on account of any occurrences in or about the premises during the term or in consequence of Lessee’s occupancy of the premises and resulting in personal injury or death, said insurance to protect, hold harmless, and indemnify Lessor not only against any and all such liability, but also against all loss, expense, and damage of any and every sort and kind, including costs of investigation and attorney’s fees and other cost of defense.  Said insurance shall be with an insurance carrier or carriers satisfactory to Lessor, and shall not be subject to cancellation except after at least ten (10) days prior written notice to Lessor; and the policy or policies for said insurance, or duly executed certificate or certificates for the same, showing compliance to date with the requirements of this section shall at all times be kept on deposit with Lessor.  If Lessee failed to comply with such requirement, Lessor may obtain such insurance and keep the same in force and effect, and Lessee shall pay Lessor upon request the premium cost thereof for the term of this lease then unexpired.

  

 

  

10.  RELATIONSHIP.  Lessee will not at any time pledge the credit of Lessor, or incur any debt, contract or liability in the name of Lessor.  Neither party shall, at any time, hold itself out to be the partner, co-venturer, agent, servant or employee of the other in any manner whatsoever, or to have any relationship one with the other, save and excepting that of Lessor and Lessee.

11.  UTILITIES.  Lessor shall pay for all Common Area Maintenance (CAM) charges, including, electric, gas, water, sewer and trash pick-up services  utilized in the premises of Lessee.

12.  SIGNS.  Lessee shall use on the exterior premises only such signs, advertising placards, names, and insignia, trademarks and descriptive material as shall have first received written approval of Lessor.

13.  LESSOR’S REPAIRS.  Lessor shall keep and maintain in good repair, the roof of the building,  of which the premises are a part, the exterior walls, exterior foundations, and structural parts of the building, landscaping and common exterior ways.  Lessor shall not be obligated to make such repairs, however, until after ten (10) days notice from lessee stating the need for such repairs.  Upon receipt of such notice, Lessor shall make such repairs with reasonable diligence.  Lessor shall not be liable to Lessee, its agents, servants and/or employees for damage or injury to persons or property arising out of the disrepair of the roof, exterior walls, exterior foundations, structural parts of the building, landscaping  and common exterior ways.  Lessor shall not be obligated to repair any portion of said building by damage caused by any casualty or act of God, except as provided in Article 19 hereof, ‘DESTRUCTION’.

14.  LESSEE’S REPAIRS.  Except as above provided, Lessee shall at its expense, repair and maintain the entire premises in good order, condition and repair.  Lessee will make no alterations in, or additions or improvements to the premises, including, but not limited to, sewers, air conditioning and heating, without written consent of  Lessor.

15.  LESSEE’S IMPROVEMENTS.  Any improvements placed upon the demised premises, by Lessee, including, but not limited to carpets, shall, upon installation, become the property of Lessor.

16.  ASSIGNING, MORTGAGING, SUBLETTING.  Lessee’s attempted transfer, assignment, subletting or hypothecation without Lessor’s written consent shall be void and confer no rights upon any third person.

17.  SUBORDINATION AND ATTORNMENT.  Lessee hereby subordinates its rights hereunder to the lien of any mortgage or deed of trust, to any lending institutions, now or hereafter in force against the land and building of which the premises are a part, and upon any buildings hereafter placed upon the land of which the premises are a part, and to all advances made or hereafter to be made upon the security thereof.  Lessee shall attorn to the purchaser upon any foreclosure or sale and recognize such purchaser as the Lessor under this lease.

18.  BANKRUPTCY - INSOLVENCY.  If all or substantially all of the Lessee’s assets be placed in the hands of a receiver or trustee, and such receivership or trusteeship continue for a period of thirty (30) days, or should the Lessee make an assignment for the benefit or creditors, or should the Lessee institute any proceedings to be adjudicated a bankrupt, or go to discharge of its debts, or to effect a plan of liquidation, composition or reorganization, or should any involuntary proceedings be filed against the Lessee under any bankruptcy laws, then this lease or any interest in the premises shall not become an asset in any of such proceedings and, Lessor may declare the term hereof ended.

  

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19.  DESTRUCTION.  Should the premises or the building or which the same are a part be damaged or destroyed in whole or in part by fire, earthquake, or other casualty, so they cannot be repaired within ninety (90) working days to substantially the condition prior to such casualty.  Lessor or Lessee may within thirty (30) days thereafter terminate this lease as of the date of such casualty.  If by reason of any laws said building cannot be repaired or restored as a building of the same class, then irrespective of the time in which the building can be repaired or restored, Lessor or Lessee at any time within thirty (30) days of such casualty, may terminate this lease as of the date of such casualty.  Upon any damage as aforesaid, and if the lease be not terminated as provided, Lessor shall with reasonable diligence restore the premises to substantially the condition prior to the casualty, with such changed as may be required, under any laws, ordinances or regulations.  If such damage shall have occurred after the commencement of the term, Lessee shall be entitled to a reasonable diminution of the minimum monthly rental hereunder during the time required for restoration, according to the proportion of the premises rendered untenantable.  Lessor shall not be liable for any damages resulting to lessee from the repair and reconstruction of such demised premises or building, or from the termination of this lease as herein provided, not shall Lessee be released thereby or in any such event from any of its obligations hereunder, except to the extent and upon the conditions expressly stated in this Article.

20.  EMINENT DOMAIN.  If the premises shall be taken under poser of eminent domain, this lease shall terminate as of such taking.  If only a part of the premises shall be so taken, Lessee’s interest in the premises and its liability for rent hereunder shall abate proportionately after the date of taking.  Lessee hereby waives all right to any damages or compensation which may be awarded in any such condemnation proceedings, and hereby assigns to Lessor the right to any such damages or compensation; provided, however, that in any such condemnation authorities for any damages to its fixtures and equipment.

If any condemnation proceedings are take  to change the grade of, or to widen the street or sidewalks, or for such other purpose of similar nature as to any of the land upon which the premises are located, Lessee’s liability for the payment of rental and its other obligations shall not be diminished or affected.

21.  INDEMNITY.  Lessee shall indemnify and hold harmless Lessor from any claim or liability of whatsoever character resulting from Lessee’s exercise of any rights or privileges hereunder.

22.  CONDITION OF PREMISES.  Lessor or Lessor’s agents have made no representations or promises with respect to the demised premises, the land upon which the premises are located except as expressly set forth herein.  The taking possession of the demised premises by Lessee shall be conclusive evidence as against Lessee, that Lessee accepts the said premises and the building of which the same form a part as being in good and satisfactory condition at the time such possession is so taken.

23.  DEFAULT BY LESSEE.  Time is of the essence.  Should Lessee be in default of any rental or other charges for a period of ten (10) days, or be in default in the performance of any other of its promises, covenants or agreements, for ten (10) days after written notice thereof from lessor, or should the Lessee vacate or abandon the premises, in addition to any or all other rights or remedies of the Lessor hereunder and/or by the law provided, Lessor may:

(a) Declare the term hereof ended and re-enter the premises and take possession thereof and remove all persons therefrom, and Lessee shall have no further claim thereon or thereunder; or

(b) Without declaring the lease ended, re-enter the premises and occupy or lease the whole or any part thereof for and on account of the Lessee and upon such terms and conditions, and for such rent as Lessor may deem proper and to collect said rent, or any other rent that may hereafter become payable and apply the same toward the amount due or thereafter to become due from Lessee, and on account of the expenses or such subletting and any other damages sustained by Lessor.  Should such rental be less than that herein agreed, Lessee shall pay such deficiency to Lessor in advance on the day of each month herein before specified for payment of minimum monthly rental, and pay Lessor forthwith upon any such reletting the costs and expenses the Lessor may incur by reason thereof, or

(c) Even though it may have relet said premises, thereafter elect to terminate this lease.

  

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Service by Lessor of any notice pursuant to unlawful detainer statutes and the surrender of possession pursuant to such notice shall not (unless the Lessor elects to the contrary at the time of or at any time subsequent to the service of such notice and such election be evidenced by a written notice to Lessee) be deemed to be a termination of this lease.  Nothing herein contained shall be construed as obligating the Lessor to relet the whole or any part of the premises.  In the event of any entry or taking possession of the premises, as aforesaid, Lessor shall have the right , but not the obligation, to remove therefrom all or any part of the personal property located therein, and may place the same in storage or a public warehouse at the expense and risk of the owner or owners thereof.

If Lessor elects to terminate this lease under (a) or (b) above, Lessor shall be entitled to recover from the Lessee, as damages, the difference, if any, between the then reasonable rental value of the premises for the period of the term reserved in the lease and the amount of rental and other charges payable by the Lessee for the balance of the term of this lease, together with the rent then unpaid, if any.

If the default complained of, other than for the payment of monies, is of such a nature that the same cannot be cured within the ten (10) day period requiring such curing, then such default shall be deemed to be cured if Lessee within such period shall have commenced the curing thereof, and shall continue thereafter with all due diligence to cause such curing and does so complete the same diligently.

Remedies given to Lessor in this article are in addition and supplemental to all other rights or remedies of Lessor under laws then in force.

24.  ATTORNEY’S FEES.  If any action at law or in equity is instituted by either Lessor or Lessee against the other to enforce any of the terms, covenants, conditions, provisions, and/or rights hereunder, the unsuccessful party to such litigation shall pay to the successful party all costs and expenses, including reasonable attorney’s fees incurred therein by such successful party, and if such successful party shall recover judgment in any action or proceeding, such costs, expenses and attorney’s fees shall be included in and as a part of such judgment.

In addition to the aforementioned, in the event the business is sold or disposed of in any manner, any and all attorney fees incurred by Lessor as a result of actions by Lessee shall be paid by Lessee.

25.  MISCELLANEOUS.  The provisions hereof shall bind and inure to the benefit of the parties hereto, and their respective heirs, legal representatives, successors and assigns.

This lease is the entire agreement between the parties hereto.  All negotiations and oral agreements acceptable to both parties are included herein.

Captions of Articles are for convenience only, and do not in any way limit or amplify the terms and provisions of this lease.

The words “Lessor” and “Lessee” refer to all such persons or corporations, and the liability of such persons or corporation shall be joint and several.

Any notice on demand given or served by either party to it on the other shall be given or served in writing, addressed as follows:  To Lessor, DAVRIC CORPORATION, 980 American Pacific Drive, Suite 111, Henderson, Nevada  89014, and Lessee at the premises.  Either party may change its address by giving  written notice to the other.

***Landlord agrees that this lease will be assumed by Parametric Sound Corporation upon its spin-off as a separate company from LRAD Corporation

  

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IN WITNESS WHEREOF, the parties hereto have affixed their signatures the day and year first above written.

	  	
LESSOR:

	  	  
	  	
DAVRIC CORPORATION

	  	  
	  	
   /s/ JERRY E. POLIS                               

	  	
Jerry E. Polis, President

	  	  
	  	
LESSEE:

	  	  
	  	
SYZYGY LICENSING LLC

	  	  
	  	
/s/ JAMES A. BARNES                          

	  	
James A. Barnes, Manager

	  	  

  

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EXHIBIT A

RULES AND REGULATIONS

This Rules and Regulations Agreement is entered into as of the date of the Lease Agreement (the “Lease”), by and between the undersigned Landlord and Tenant.  To the extent of a conflict between the Lease and the rules and regulations, the Lease shall govern and control.  Landlord hereby establishes the following rules and regulations for the safety, care and cleanliness of (i) the warehouse areas (hereinafter referred to as the “Premises”) of any tenant or tenants of the Building (hereinafter referred to as the “tenant”), (ii) the common area, and (iii) the Project in general, or for the preservation of good order:

A.           FOR THE STORE AREAS:

1.           All floor areas of the Premises (including, without limitation, vestibules, entrances, air returns, doors, fixtures, windows, and plate glass shall be maintained in a clean, safe, and good condition.

2.           All trash, refuse, and other waste materials shall be stored in adequate containers and regularly removed from the Premises. These containers shall not be visible to the general public and shall not constitute a health or fire hazard or nuisance.  In the event that any tenant shall fail to remedy such a health or fire hazard or nuisance within five (5) calendar days after written notice by Landlord to tenant, Landlord may remedy and/or correct such health or fire hazard or nuisance at the expense of the tenant involved.

3.           No portion of the Premises shall be used for lodging purposes.

4.           Neither sidewalks nor walkways shall be used to display, store, or place any merchandise, equipment, or devices, except with Landlord’s prior written approval.

5.           No public telephone, newsstand, shoeshine stand, or refreshment, vending, or other coin operated machine shall be installed or placed on any sidewalk or walkway area adjacent to the Premises or on the common area without Landlord’s prior written approval in each instance.

6.           No person or persons shall use the Premises, or any part thereof, for conducting therein a second-hand store, auction, distress, fire, bankruptcy, “going-out-of business,” or “lost our lease” sale without Landlord’s prior written consent.

7.           Landlord shall have the absolute right to enter upon the Premises to perform such cleaning and clearing of the pipes and drains serving the Premises (including rotor-rooter service) as Landlord shall deem necessary.  The tenant shall pay Landlord the estimated costs therefore estimated as part of the Operating Expenses on a monthly basis.

B.           FOR THE COMMON AREA:

1.           Use of the common area shall be in an orderly manner in accordance with directional and/or other signs and/or guides.  Roadways shall not be used at a speed in excess of ten (10) miles per hour and shall not be used for parking or stopping, except for immediate loading or unloading of passengers. Walkways shall be used only for pedestrian travel.

2.           Customers and invitees of tenants shall not use the parking areas for anything but parking motor vehicles; provided, however, that no tenant or the employees of any tenant shall park in the parking areas.  All motor vehicles shall be parked in an orderly manner within the painted lines defining the individual parking places.  During peak periods of business activity, Landlord may impose any and all controls Landlord deems necessary to operate the parking lot, including, but not limited to, the length of time for parking use.

3.           No person shall use any utility area, truck loading area, or other area reserved for use in conducting business, except for the specific purpose for which permission to use these areas has been given.

4.           Without the written consent of the Landlord, no person shall use any of the common area for:

  

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a.           Vending, peddling, or soliciting orders; for the sale or distribution of any merchandise, device, service, periodical, book, pamphlet, or other matter;

b.           Exhibiting any sign, placard, banner, notice, or other written material;

c.           Distributing any circular, booklet, handbill, placard, or other material;

d.           Soliciting membership in any organization, group, or association, or soliciting contributions for any purpose;

e.           Parading, patrolling, picketing, demonstrating, or engaging in conduct that might interfere with the use of the common area or otherwise be detrimental to any of the business establishments in the Project;

f.           Using the common area for any purpose when none of the business establishments in the Project is open for business;

g.           Discarding any paper, glass, or extraneous matter of any kind, except in designated receptacles; or

 

h.           Using a sound-making device of any kind or making or permitting any noise that is annoying, unpleasant, or distasteful; or

i.           Damaging any sign, light, fixture, landscaping material, or other improvement or property within the Project.

The above listing of specific prohibitions is not intended to be exclusive, but is intended to indicate that tenant is only to use the common area as a means of access and convenience for shopping at the business establishments in the Project and that such use is subject to the control of Landlord.

C.           IN GENERAL:

1.           Other than seeing eye dogs and the like, no pets shall be allowed in or about the store areas or common area of the Project under Landlord’s sole and exclusive control, without Landlord’s prior written consent.

2.           All tenants and their authorized representatives and invitees shall not loiter in the parking lot or other parts of the common area; nor shall they in any way obstruct the sidewalks, entry passages, pedestrian passageways, driveways, entrances, and/or exits, all of which shall be used only as ingress to and egress from the Premises.

3.           Tenants and their authorized representatives and invitees shall not throw cigar or cigarette butts or other substances or litter of any kind in or about the buildings of the Project, except in receptacles placed in it for that purpose.

4.           Landlord shall not be responsible to any tenant or to any other person for the non-observance or violation of any of these rules and regulations by any other tenant or other person. All tenants shall be deemed to have read these rules and to have agreed to abide by them as a condition precedent to occupying the Premises.

IN WITNESS WHEREOF this Rules and Regulations Agreement is executed as of the date of the Lease Agreement.

	
LANDLORD: Davric Corporation

	
TENANT: Syzygy Licensing LLC

	  	  
	
Signature:    /s/ JERRY E. POLIS

	
Signature:    /s/ JAMES A. BARNES

	
Date:    6/16/10

	
Date:  6/16/10

	
Print Name:  Jerry E. Polis

	
Print Name: James A. Barnes

	
Title: Davric Corporation, Gen’l Partner

	
Title: Manager

	
          President

	  

 

 

 

 

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