TECHNOLOGY ROYALTY AGREEMENT
This
Agreement is between Perfect Storm Software, LLC (“The Developer”) whose address
is 000 Xxxxxxx Xxx Xxxxxx, Xxxxxxxxx, XX 00000 and Las Vegas Gaming, Inc. (“The
Recipient”), a Nevada corporation having a principal place of business located
at 0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000.
TABLE
OF CONTENTS
RECITALS
1.
EFFECTIVE DATE
2.
DEFINITIONS
3.
WARRANTY, SUPERIOR RIGHTS AND REPRESENTATIONS
4.
LICENSE
5.
PAYMENTS AND REPORTS
6.
TERM AND TERMINATION
7.
ASSIGNMENT
8.
INDEMNIFICATION
9.
USE OF THE DEVELOPER’S AND MEMBERS’ NAMES
10.
CONFIDENTIAL INFORMATION
11.
ALTERNATE DISPUTE RESOLUTION
12.
GENERAL
SIGNATURES
RECITALS
A.
The
Developer owns certain Technology Rights related to Licensed Subject Matter
which were developed prior to
any member of The Developer being employed by The Recipient.
B.
Members of The Developer were subsequently employed by the Recipient and created
LVGI Developed Subject
Matter including Player Vision 3 which relies on the Licensed Subject Matter for
commercialisation. Player Vision 3
and all of its source code is a wholly owned asset of LVGI.
C.
The Developer and The Recipient desire to have the Licensed Subject Matter and
LVGI Developed Subject Matter
combined and used for the benefit of The Recipient and incorporated into any
derivative works by The Recipient.
D. The
Recipient wishes to obtain a license from The Developer to practice Licensed
Subject Matter in the derivative
works.
NOW,
THEREFORE, in consideration of the mutual covenants and premises herein
contained, the parties agree as follows:
1.
EFFECTIVE DATE
This
Agreement is effective August 1, 2009 ("Effective Date").
2.
DEFINITIONS
As used
in this Agreement, the following terms have the meanings indicated:
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2.1
"Affiliate"
means any business entity more than 50% owned by The Recipient, any business
entity which owns more than 50% of The Recipient, or any business entity that is
more than 50% owned by a business entity that owns more than 50% of The
Recipient.
2.2
"Licensed
Field" means the gaming (gambling) and/or hospitality industry whether
land based, sea based, river based, or fully electronic such as internet based
gaming (gambling) or any other method that allows a person to place a wager on
an outcome with real or virtual currency.
2.3
"Licensed Product" means
any product Sold by The Recipient comprising Licensed Subject Matter pursuant to
this Agreement.
2.4
"Licensed
Subject Matter" means inventions, discoveries, concepts, processes,
technical architecture, source code, hardware designs, and algorithms considered
to be proprietary know-how or Technology Rights which are within Licensed Field
and were utilised in the creation of The Recipient’s products commercially
referred to as PlayerVision and the PlayerVision family of
products. This includes, but is not limited to, the message passing
architecture, persistent storage design, n-tier architecture, application
definition language, and modular design which were conceived of and reached
technical feasibility prior to March 10th, 2008.
2.5
"Licensed
Territory" means worldwide.
2.6
"Net
Sales" means the gross revenues received by The Recipient from the Sale
of Licensed Products less sales and/or use taxes actually paid, import and/or
export duties actually paid, outbound transportation prepaid or allowed, and
amounts allowed or credited due to returns (not to exceed the original billing
or invoice amount).
2.8
"Sale or Sold" means the
transfer, use of, or disposition of a Licensed Product for value to a party
other than The Recipient whether sold, licensed, rented, subscribed to, or
utilised in any other manner.
2.9
"Technology Rights"
means The Developer’s rights in technical information, know-how, processes,
procedures, compositions, devices, methods, formulas, protocols, techniques,
software, designs, drawings or data created by The Developer or its members
which were conceived of and reached technical feasibility prior to March 10th,
2008..
2.10
"Markup Percentage"
means the amount added to the purchase cost of an item to arrive at a selling
price expressed as a percentage.
2.11
"Change In
Control" of The Recipient means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events:
a. Any
Exchange Act Person becomes the Owner, directly or indirectly, of securities of
The Recipient representing more than fifty percent (50%) of the combined voting
power of The Recipient’s then outstanding securities other than by virtue of a
merger, consolidation or similar transaction. Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur (a) on account of
the acquisition of securities of The Recipient by an investor, any affiliate
thereof or any other Exchange Act Person from The Recipient in a transaction or
series of related transactions the primary purpose of which is to obtain
financing for The Recipient through the issuance of equity securities or (b)
solely because the level of Ownership held by any Exchange Act Person (the
“Subject Person”) exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition of voting
securities by The Recipient reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of voting securities by The Recipient,
and after such share acquisition, the Subject Person becomes the Owner of any
additional voting securities that, assuming the repurchase or other
acquisition had not occurred, increases the percentage of the then outstanding
voting securities Owned by the Subject Person over the designated percentage
threshold, then a Change in Control shall be deemed to occur;
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b. There
is consummated a merger, consolidation or similar transaction involving
(directly or indirectly) The Recipient and, immediately after the consummation
of such merger, consolidation or similar transaction, the stockholders of The
Recipient immediately prior thereto do not Own, directly or indirectly,
either (a) outstanding voting securities representing more than fifty percent
(50%) of the combined outstanding voting power of the surviving Entity in such
merger, consolidation or similar transaction or (b) more than fifty percent
(50%) of the combined outstanding voting power of the parent of the surviving
Entity in such merger, consolidation or similar transaction, in each case in
substantially the same proportions as their Ownership of the outstanding voting
securities of The Recipient immediately prior to such transaction;
c. There
is consummated a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of The Recipient and its
subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of The Recipient and its
subsidiaries to an Entity, more than fifty percent (50%) of the combined voting
power of the voting securities of which are Owned by stockholders of The
Recipient in substantially the same proportions as their Ownership of the
outstanding voting securities of The Recipient immediately prior to such sale,
lease, license or other disposition; or
d.
Individuals who, on the date this Agreement is executed, are members of the
Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the members of the Board; provided, however, that if the appointment
or election (or nomination for election) of any new Board member was approved or
recommended by a majority vote of the members of the Incumbent Board then still
in office, such new member shall be considered as a member of the Incumbent
Board.
2.12
"Entity" means a
corporation, partnership or any other entity.
2.13
"Exchange Act" means the
Securities Exchange Act of 1934, as amended.
2.14
"Exchange Act Person"
means any natural person, Entity or “group” (within the meaning of Section 13(d)
or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not
include (A) The Recipient or any subsidiary of The Recipient, (B) any employee
benefit plan of The Recipient or any subsidiary of The Recipient or any trustee
or other fiduciary holding securities under an employee benefit plan of The
Recipient or any subsidiary of The Recipient, (C) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(D) an Entity Owned, directly or indirectly, by the stockholders of The
Recipient in substantially the same proportions as their Ownership of stock of
The Recipient.
2.15
“Own,” “Owned,” “Owner,” “Ownership” - A person or
Entity shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to
have acquired “Ownership” of securities if such person or Entity, directly or
indirectly, through any contract, arrangement, understanding, relationship or
otherwise, has or shares voting power, which includes the power to vote or to
direct the voting, with respect to such securities.
2.16
“LVGI Developed Subject Matter”
- means inventions, discoveries, concepts, processes, technical architecture,
source code, hardware designs, and algorithms which are a part of The
Recipient’s products (including, but not limited to PlayerVision 3 products)
which were developed after March 10th, 2008.
3.
WARRANTY: SUPERIOR-RIGHTS
3.1 The
Developer represents and warrants its belief that (i) it is the owner of the
entire right, title, and interest in and to Licensed Subject Matter, (ii) it has
the sole right to grant licenses thereunder, and (iii) it has not knowingly
granted licenses thereunder to any other entity that would restrict rights
granted to The Recipient.
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3.2 The
Recipient understands and acknowledges that The Developer, by this Agreement,
makes no representation as to the operability or fitness for any use, safety,
efficacy, ability to obtain regulatory approval, and/or breadth of the Licensed
Subject Matter.
3.3 The
Recipient, by execution hereof, acknowledges, covenants and agrees that it has
not been induced in any way by The Developer or its members to enter into this
Agreement, and further warrants and represents that (i) it has conducted
sufficient due diligence with respect to all items and issues pertaining to this
Article 3 and all other matters pertaining to this Agreement; and (ii) The
Recipient has adequate knowledge and expertise, or has utilised knowledgeable
and expert consultants, to adequately conduct the due diligence, and agrees to
accept all risks inherent herein.
4.
LICENSE
4.1 The
Developer hereby grants to The Recipient a royalty-bearing, exclusive license
under Licensed Subject Matter to manufacture, have manufactured, and/or sell
Licensed Products within the Licensed Territory for use within Licensed Field.
This grant is subject to the payment by The Recipient to The Developer of all
consideration as provided herein, and is further subject to rights retained by
The Developer to:
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a.
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Create
derivative works for products or services outside of the Licensed Field;
and
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b.
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License
Licensed Subject Matter to other parties for use outside of the Licensed
Field.
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4.2 The
Recipient may extend the license granted herein to any Affiliate if the
Affiliate consents to be bound by this Agreement to the same extent as The
Recipient.
4.3 The
Recipient may grant sub-licenses consistent with this Agreement if The Recipient
is responsible for the operations of its sub-licensees relevant to this
Agreement as if the operations were carried out by The Recipient, including the
payment of royalties whether or not paid to The Recipient by a sub-licensee. The
Recipient must deliver to The Developer a true and correct copy of each
sub-license granted by The Recipient, and any modification or termination
thereof, within 30 days after execution, modification, or
termination. Any such sub-license must meet the criteria of being an
arms-length transaction between a willing buyer and a willing seller at fair
market value. When this Agreement is terminated, all existing
sub-licenses granted by The Recipient must be assigned to The
Developer.
4.3 The
Developer acknowledges that all LVGI Developed Subject Matter created by members
of The Developer as employees of The Recipient is owned fully and
without limitation by The Recipient.
5.
PAYMENTS AND REPORTS
5.1 In
consideration of rights granted by The Developer to The Recipient under this
Agreement, The Recipient will pay The Developer the following:
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a.
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A
one time royalty fee in the amount of $1,000.00 due and payable on the
date when this Agreement is executed by The
Recipient;
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b.
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An
annual license reissue fee in the amount of $20,000.00 due and payable on
each anniversary of the Effective Date beginning on the first
anniversary;
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c.
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A
running royalty bonus equal to 5% of Net Sales for software based Licensed
Products.
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d.
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A
running royalty bonus equal to 5% of Net Sales for hardware utilised to
operate Licensed Products where the Markup Percentage of the hardware is
greater than 20%.
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5.2 In
consideration of rights granted by The Developer to The Recipient under this
Agreement, The Recipient further agrees to issue to The Developer a royalty
bonus of 750,000 (seven hundred and fifty thousand) shares of The Recipient's
common stock simultaneously with any Change In Control of The
Recipient.
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5.3
During the Term of this Agreement and for 1 year thereafter, The Recipient
agrees to keep complete and accurate records of its and its sub-licensees Sales
and Net Sales of Licensed Products under the license granted in this Agreement
in sufficient detail to enable the royalties payable here-under to be
determined. The Recipient agrees to permit The Developer or its representatives,
at The Developer’s expense, to periodically examine its books, ledgers, and
records during regular business hours for the purpose of and to the extent
necessary to verify any report required under this Agreement. If the amounts due
to The Developer are determined to have been underpaid, The Recipient will pay
the cost of the examination and accrued interest at the highest allowable
rate.
5.4
Within 30 days after March 31st, June 30th, September 30th and December 31st,
beginning immediately after the Effective Date, The Recipient must deliver to
The Developer a true and accurate written report, even if no payments are due
The Developer, giving the particulars of the business conducted by The Recipient
and its sub-licensees, if any exist, during the preceding 3 calendar months
under this Agreement as are pertinent to calculating payments here-under. This
report will include at least:
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a.
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the
quantities of Licensed Subject Matter that it has
produced;
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b.
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the
total Sales;
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c.
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the
calculation of royalties thereon;
and
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d.
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the
total royalties computed and due The
Developer.
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Simultaneously
with the delivery of each report, The Recipient must pay to The Developer the
amount, if any, due for the period of each report.
5.5 On or
before each anniversary of the Effective Date, irrespective of having a first
Sale or offer for Sale, The Recipient must deliver to The Developer a written
progress report as to The Recipient’s (and any sub-licensee of The Recipient)
efforts and accomplishments during the preceding year in diligently
commercialising Licensed Subject Matter in the Licensed Territory and The
Recipient’s (and, if applicable, its sub-licensees’) commercialisation plans for
the upcoming year.
5.6 All
amounts payable here by The Recipient must be paid in US dollars without
deductions for taxes, assessments, fees, or charges of any kind. Checks must be
payable to The Developer.
6.
TERM AND TERMINATION
6.1 The
term of this Agreement is from the Effective Date for a period of 15
years.
6.2 Any
time after 2 years from the Effective Date, The Developer has the right to
terminate the exclusivity of this license in any gaming jurisdiction(s) and/or
hospitality markets in the Licensed Territory if The Recipient, within 90 days
after receiving written notice from The Developer of intended termination of
exclusivity, fails to provide written evidence that The Recipient or its
sub-licensees have in a commercially reasonable manner commercialised or are
actively attempting to commercialise the Licenses Subject Matter in
such jurisdiction(s) and/or hospitality markets.
6.3 Any
time after 3 years from the Effective Date, The Developer has the right to
terminate this license in any gaming jurisdiction(s) and/or hospitality markets
in the Licensed Territory if The Recipient, within 90 days after receiving
written notice from The Developer of intended termination, fails to provide
written evidence that The Recipient or its sub-licensees have in a commercially
reasonable manner commercialised or are actively attempting to commercialise the
Licensed Subject Matter in such jurisdiction(s) and/or hospitality
markets.
6.4 The
following definitions apply to Article 6: (i) "Commercialise" means having Sales
of Licensed Products in such gaming jurisdiction and/or hospitality market; and
(ii) "Active attempts to commercialise" means having Sales of Licensed Products
or an effective, ongoing and active research, development, manufacturing,
marketing or sales program as appropriate, directed toward obtaining regulatory
approval, production or Sales of Licensed Products in any jurisdiction and/or
hospitality market, and plans acceptable to The Developer, in its sole
discretion, to commercialise licensed inventions in the jurisdiction(s) and/or
hospitality markets that The Developer intends to terminate.
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6.5 This
Agreement will earlier terminate:
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a.
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automatically
if The Recipient becomes bankrupt or insolvent and/or if the business of
The Recipient is placed in the hands of a receiver, assignee, or trustee,
whether by voluntary act of The Recipient or otherwise;
or
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b.
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upon
30 days written notice from The Developer if The Recipient breaches or
defaults on its obligation to make payments (if any are due) or reports,
in accordance with the terms of Article 5, unless, before the end of the
30 day period, The Recipient has cured the default or breach and so
notifies The Developer, stating the manner of the cure;
or
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c.
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upon
90 days written notice if The Recipient breaches or defaults on any other
obligation under this Agreement, unless, before the end of the 90 day
period, The Recipient has cured the default or breach and so notifies The
Developer, stating the manner of the cure;
or
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d.
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at
any time by mutual written agreement between The Recipient and The
Developer, upon 180 days written notice to all parties and subject to any
terms herein which survive termination;
or
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e.
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under
the provisions of Paragraphs 6.2 and 6.3 if
invoked.
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6.6 If
this Agreement is terminated for any cause:
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a.
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nothing
herein will be construed to release either party of any obligation matured
prior to the effective date of the
termination;
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b.
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after
the effective date of the termination, The Recipient may sell all Licensed
Products and parts it has on hand at the date of termination, if it pays
earned royalties thereon according to the terms of Article 5;
and
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c.
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The
Recipient will be bound by the provisions of Articles 8 (Indemnification),
9 (Use of The Developer’s and any Members’ Names), and 10 (Confidential
Information) of this Agreement.
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7.
ASSIGNMENT
Except in
connection with the sale of substantially all of The Recipient’s assets to a
third party, this Agreement may not be assigned by The Recipient without the
prior written consent of The Developer, which will not be unreasonably
withheld.
8.
INDEMNIFICATION
The
Recipient agrees to hold harmless and indemnify The Developer, its
Members, Regents, officers, employees and agents from and against any claims,
demands, or causes of action whatsoever, including without limitation those
arising on account of any injury or death of persons or damage to property
caused by, or arising out of, or resulting from, the exercise or practice of the
license granted here-under by The Recipient, its Affiliates or their officers,
employees, agents or representatives.
9.
USE OF THE DEVELOPER’S AND MEMBERS’ NAMES
The
Recipient may not use the name of The Developer or its Members without express
written consent.
10.
CONFIDENTIAL INFORMATION AND PUBLICATION
10.1 The
Developer and The Recipient each agree that all information contained in
documents marked "confidential" and forwarded to one by the other (i) be
received in strict confidence, (ii) be used only for the purposes of this
Agreement, and (iii) not be disclosed by the recipient party, its agents or
employees without the prior written consent of the other party, except to the
extent that the recipient party can establish competent written proof that such
information:
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a.
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was
in the public domain at the time of
disclosure;
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b.
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later
became part of the public domain through no act or omission of the
recipient party, its employees, agents, successors or
assigns;
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c.
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was
lawfully disclosed to the recipient party by a third party having the
right to disclose it;
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d.
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was
already known by the recipient party at the time of
disclosure;
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e.
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was
independently developed by the recipient;
or
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f.
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is
required by law or regulation to be disclosed
or
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g.
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where
disclosure is required by the Security Exchange Commission in a regulatory
filing.
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10.2 Each
party’s obligation of confidence here-under shall be fulfilled by using at least
the same degree of care with the other party’s confidential information as it
uses to protect its own confidential information. This obligation shall exist
while this Agreement is in force and for a period of 3 years
thereafter.
10.3 The
Developer will submit its manuscript for any proposed publication of research
related to Licensed Subject Matter to The Recipient at least 30 days before
publication, and The Recipient shall have the right to review and comment upon
the publication in order to protect The Recipient’s confidential information.
Upon The Recipient’s request, publication will be delayed up to 60 additional
days to enable The Recipient to secure adequate intellectual property protection
of The Recipient’s property that would be affected by the
publication.
11.
ALTERNATE DISPUTE RESOLUTION
Any
dispute or controversy arising out of or relating to this Agreement, its
construction or its actual or alleged breach will be decided by mediation. If
the mediation does not result in a resolution of such dispute or controversy, it
will be finally decided by an appropriate method of alternate dispute
resolution, including without limitation, arbitration, conducted in the city of
Las Vegas, Nevada in accordance with the Commercial Dispute Resolution. The
arbitration panel will include members knowledgeable in the evaluation of
computer science technology. Judgement upon the award rendered may be entered in
the highest court or forum having jurisdiction, state or federal. The provisions
of this Article 11 will not apply to any dispute or controversy as to which any
treaty or law prohibits such arbitration. The decision of the arbitration must
be sanctioned by a court of law having jurisdiction to be binding upon and
enforceable by the parties.
12.
GENERAL
12.1 This
Agreement constitutes the entire and only agreement between the parties for
Licensed Subject Matter and all other prior negotiations, representations,
agreements, and understandings are superseded hereby. No agreements altering or
supplementing the terms hereof may be made except by a written document signed
by both parties.
12.2 Any
notice required by this Agreement must be given by prepaid, first class,
certified mail, return receipt requested, addressed in the case of The Developer
to:
Managing
Member
Perfect
Storm Software, LLC
000
Xxxxxxx Xxx Xxxxxx
Xxxxxxxxx,
XX 00000
With a
copy e-mailed to:
xxxxx@xxxxxxxxxxxxxx.xxx
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or in the
case of The Recipient to:
CEO
Las Vegas
Gaming, Inc.
0000
Xxxxxx Xxxxxx Xxxxxxx
Xxxxx
000
Xxx
Xxxxx, XX 00000
or other
addresses as may be given from time to time under the terms of this notice
provision.
12.3 The
Recipient must comply with all applicable federal, state and local laws and
regulations in connection with its activities pursuant to this
Agreement.
12.4 This
Agreement will be construed and enforced in accordance with the laws of the
State of Nevada.
12.5
Failure of The Developer to enforce a right under this Agreement will not act as
a waiver of that right or the ability to later assert that right relative to the
particular situation involved.
12.6
Headings are included herein for convenience only and shall not be used to
construe this Agreement.
12.7 If
any part of this Agreement is for any reason found to be unenforceable, all
other parts nevertheless remain enforceable.
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IN
WITNESS WHEREOF, parties hereto have caused their duly authorised
representatives to execute this Agreement.
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Perfect
Storm Software, LLC
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Las
Vegas Gaming, Inc.
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Name:
Xxxxx Xxxxxxx
Title:
Managing Member
Signature:
/s/ Xxxxx
Xxxxxxx
Date:
8/6/09
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Name:
Xxxx Xxxx
Title:
Chairman of the Board
Signature:
/s/ Xxxxxxx X.
Xxxx
Date:
8/5/09
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Name:
Xxxxxxx X. Xxxxx
Title:
Managing Member
Signature:
/s/ Xxxxxxx X.
Xxxxx
Date:_____8/6/09
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Name:
Xxx Xxxxxxx
Title:
Chief Executive Officer
Signature:
/s/ Xxx X.
Xxxxxxx
Date:
8/5/09
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Name:
Xxxxx Xxxxxxxx
Title:
Managing Member
Signature: /s/
Xxxxx X.
Xxxxxxxx
Date:
8/6/09
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Name:
Xxxxx Xxxxxxx
Title:
Chief Financial Officer
Signature:
/s/
Xxxxx X.
Xxxxxxx
Date:
8/5/09
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Name:
Xxxxxx Xxxxxxxx
Title:
Managing Member
Signature:
/s/ Xxxxxx
Xxxxxxxx
Date:
8/6/09
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Name:
Xxxxxx Xxxxx
Title:
Managing Member
Signature:
/s/ Xxxxxx
Xxxxx
Date:
8/6/09
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