option to license us patent appl no. : 10 / 620, 303 1. names this option agreement is made by brain tree international, inc., a utah corporation doing business as brain tree ( hereinafter “ brain tree ” ), and michael g mcguire., an individual doing business as mgm ( hereinafter “ mgm ” ). 2. option to license us patent in exchange for a $ 10, 000 non - refundable payment that mgm has made to brain tree ( the “ option fee ” ), brain tree hereby grants to mgm an option to license the intellectual property commonly known as an “ apparatus to convert an analog signal to a digital format using an analog broadcast license ” ( the “ option ” ), relating to the las vegas, nevada and surrounding areas as might be identified by an existing fcc issued broadcast license and to be defined by a definitive license agreement upon exercise of the option. brian tree hereby acknowledges receipt of the $ 10, 000 non - refundable option fee received from mgm on september 27, 2011. the option fee is in addition to any licensee fee or price that will be due and payable upon the exercise of this option and the execution of a definitive license agreement. if mgm exercises this option, brain tree agrees to license the intellectual property to mgm on terms to be set forth in a formal license agreement. 3. exercise of option pursuant to this option, mgm has the right to exercise its option by delivering to brain tree, on or before november 1, 2011, a second payment of $ 10, 000 and a written notice of exercise of the option. mgm may deliver the payment and notice by sending it to brain tree ’ s office at 1390 south 1100 east, ste 204, salt lake city, utah 84105 by certified mail or private overnight mail service, in which case the payment and notice will be treated as delivered when received at brain tree ’ s address in person or placed in the possession of the u. s. postal service or the private carrier. the second payment of $ 10, 000 upon exercise of the option will be applied to any future royalties due to brain tree for an annual royalty period november 1, 2011 to november 1, 2012 for the las vegas, nv area. 4. royalties upon exercise of the option and execution of a definitive license agreement, future royalties owed by mgm will be determined by a calculation of market population as set forth in the license agreement. the parties agree