Exhibit 10.4
DOMAIN LEASE AGREEMENT
XXX.XXX.XXX
This agreement dated for reference January 4, 2008 is between Extension Media
LLC. (LESSOR), an Arizona LLC with a business address of 0000 Xxxx Xxxxxxxx,
Xxxxx 000, Xxxxxx Xxxxxxx 00000 and Extensions, Inc. (LESSEE), a Nevada
corporation with a Business office at 000 Xxxxx Xxxx Xxx Xxxx Xxxxx 000,
Xxxxxxx XX, 00000. Whereas Lessor owns the Domain Name xxx.xxx.xxx and has
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agreed to lease the right to develop the domain xxx.xxx.xxx (xxx.xxx.xxx) for
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the purpose of developing a social support network.
1. DEFINITIONS. In this agreement,
a. "Domain name" means xxx.xxx.xxx
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b. "Sub-Domain name" means any name between the www. and .xxx.xxx, for
example "xxx.xxxxxx.xxx.xxx".
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c. "Sub-Sub-Domain" name mean any name before the Sub-Domain name, for
example, xxx.xxxxxx.xxxxxx.xxx.xxx".
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www. (Sub-Sub-Domain).Xxxxxx.xxx.xxx.
d. "Effective Date" means January 4, 2008, which the parties have signed
this agreement.
e. "Social Network" means the creation of a network where members can sign
up, and interact with one another residing on the xxx.xxx.xxx domain.
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f. "Members" means any one who sign up for an account on the Social
Network.:
g. "Membership fee" shall mean the amount of money that a member has to
pay monthly in order to have a active membership.
h. "Active Member" shall mean any member who has signed up and has logged
onto their home page within the last 91 days.
i. "Home Page" is the members' individual webpage which they are directed
to upon signing.
j. "Royalty" means Monthly Revenues due to the Lessor, subject to the terms
set out in paragraph 5.
k. "$" means United States dollars unless otherwise indicated.
l. References to time and business days, whether specific or general, are
references to the time and business days in Houston Texas USA.
2. LEASE OF RIGHT TO DEVELOP DOMAIN XXX.XXX.XXX . Lessor will lease the right to
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develop the domain xxx.xxx.xxx for the purpose of Lessee to develop a Social
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Network.
Notwithstanding the above, the Lessor's right to develop additional business
activities at the Domain Name shall not be impeded by the Lessee.
3. DEVELOPMENT OF SUB-DOMAIN NAME. Lessee must immediately begin to develop the
Domainn Name resinding at xxx.XXX.XXX so that it can acquire members as soon as
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practically possible. Lessee acknowledges that this is a material term of this
agreement and Lessee's failure to develop the Domain Name constitutes a default
under paragraph 15. Lessee is responsible for all costs of developing the
xxx.Xxx.Xxx social network. All right, title and
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interest to any trademarks related to the Domain Names and all logos, copyrights
and other marks associated with the Domain Names will remain the property of the
Lessor.
4. TERM. This agreement will stay in effect until May 31, 2014, unless
terminated by either party according to Paragraph 13.
5. MONTHLY ROYALTY.
a. The Monthly Royalty paid to Lessor will be based on the following formula as
follows:
i. $ 1 per registered member per month (as defined as any member who has
logged on in any 91 day period of time) Plus a 5% Royalty on the gross revenues
derived by any sales, ad placements and or development agreements within the
xxx.xxx.xxx domain and any and all sub and xxx-xxx.xxx.xxx domains for the
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period on June 1, 2009 to May 31, 2010.
ii. $ 1.50 per registered member per month (as defined as any member who has
logged on in any 91 day period of time) Plus 6% Royalty on the gross revenues
derived by any sales, ad placements and or development agreements within the
xxx.xxx.xxx domain and any and all sub and xxx-xxx.xxx.xxx domains for the
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period on June 1, 2010 to May 31, 2011.
iii. $ 2.00 per registered member per month (as defined as any member who has
logged on in any 91 day period of time) Plus a 7% Royalty on the gross revenues
derived by any sales, ad placements and or development agreements within the
xxx.xxx.xxx domain and any and all sub and xxx-xxx.xxx.xxx domains for the
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period on June 1, 2011 to May 31, 2012.
iv. $ 2.50 per registered member per month (as defined as any member who has
logged on in any 91 day period of time) Plus a 8% Royalty on the gross revenues
derived by any sales, ad placements and or development agreements within the
xxx.xxx.xxx domain and any and all sub and xxx-xxx.xxx.xxx domains for the
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period on June 1, 2012 to May 31, 2013.
v. $ 3.00 per registered member per month (as defined as any member who has
logged on in any 91 day period of time) Plus a 9% Royalty on the gross revenues
derived by any sales, ad placements and or development agreements within the
xxx.xxx.xxx domain and any and all sub and xxx-xxx.xxx.xxx domains for the
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period on June 1, 2013 to May 31, 2014.
b. Lessee will pay the Royalty in monthly installments on the 30th day of the
month following the month in which Lessee receives Gross Revenues.
c. Lessee will deliver with the Royalty payment a statement that sets out the
total Gross Revenues received, a list of items deducted to determine the Net
Revenues, and the calculation of the Royalty.
d. If Lessor objects to any Royalty statement, then Lessor must give Lessee
written notice within one year of the date of the Year-End Royalty statement,
otherwise the Royalty statement is deemed to be conclusive and binding on the
Lessor. Lessor cannot make any claim against the statement unless it makes the
claim within the one year period following the date of the Year-End Royalty
statement.
e. Between the period of the signing of this agreement and until May 31, 2009
"The Development Period" the Lessee Minimum Royalty due to the Lessor will be
$50,000. During the Development Period the The Lessor will accept in Lieu of
$50,000 minimum royalty 10,000,000 shares of the Lessee common stock issued at
the signing of the which will be fully paid and non assessable.
f. Beginning June 1, 2009 the minimum annual Royalty will be $1,000,000. To
insure compliance with this the Lessee will allow the Lessor to place a Uniform
Commercial Code (UCC) filing anytime after June 1, 2009 for the amount of
$1,000,000 against the minimum Royalty due for the period between June 1, 2009
and May 31, 2010. The Lessee agrees and will not protest the release of this
UCC until all Royalties from the Lessee for the Period are paid.
g. Beginning June 1, 2010 the minimum annual Royalty will be $5,000,000. To
insure compliance with this the Lessee will allow the Lessor to place a Uniform
Commercial Code (UCC) filing anytime after June 1, 2010 for the amount of
$5,000,000 against the minimum Royalty due for the period between June 1, 2010
and May 31, 2011. The Lessee agrees and will not protest the release of this
UCC until all Royalties from the Lessee for the Period are paid.
h. Beginning June 1, 2011 the minimum annual Royalty will be $10,000,000. To
insure compliance with this the Lessee will allow the Lessor to place a Uniform
Commercial Code (UCC) filing anytime after June 1, 2011 for the amount of
$10,000,000 against the minimum Royalty due for the period between June 1, 2011
and May 31, 2012. The Lessee agrees and will not protest the release of this
UCC until all Royalties from the Lessee for the Period are paid.
i. Beginning June 1, 2012 the minimum annual Royalty will be $15,000,000. To
insure compliance with this the Lessee will allow the Lessor to place a Uniform
Commercial Code (UCC) filing anytime after June 1, 2012 for the amount of
$15,000,000 against the minimum Royalty due for the period between June 1, 2012
and May 31, 2013. The Lessee agrees and will not protest the release of this
UCC until all Royalties from the Lessee for the Period are paid
i. Beginning June 1, 2013 the minimum annual Royalty will be $20,000,000. To
insure compliance with this the Lessee will allow the Lessor to place a Uniform
Commercial Code (UCC) filing anytime after June 1, 2013 for the amount of
$20,000,000 against the minimum Royalty due for the period between June 1, 2013
and May 31, 2014. The Lessee
In the case that the minimum is not reached through the aggregate of monthly
payments, Lessee will make up the difference by payment to Lessor on the 30th of
January of the year following the annual Royalty in question.
f. If Lessee fails to make a Royalty payment within 30 days of the date on which
it is due then Lessee is in default of this agreement.
6. OPTION TO RENEW. The Lessee will have not have the option to renew. The
Lessee agrees that any renewal will commence in a separate agreement.
7. EXAMINATION OF RECORDS. Lessee will keep accurate books and records
concerning all transactions relating to this agreement for two years from the
date on which Lessor receives the Royalty statements. Lessee will permit Lessor
or Lessor's representative to examine them at Lessee's business premises during
Lessee's normal business hours if Lessor has given Lessee four days' written
8. INDEPENDENT AUDIT. If Lessor discovers an error when it examines Lessee's
records as permitted by paragraph 6, then Lessor may have the books and records
audited by independent accountants qualified to perform audits and approved by
Lessee. If the audit uncovers an underpayment of a Royalty and restates the
amount of the Royalty, the Lessee immediately will pay the amount of the
underpayment to Lessor. Lessor will pay the cost of the audit unless the
underpayment equals or exceeds 5% of the restated Royalty, in which case Lessee
will pay the cost of the audit. The decision of the independent auditor is
binding on the parties.
9. NON-DISCLOSURE AND USE OF CONFIDENTIAL INFORMATION.
a. Lessor will not disclose to others, personally use for its own benefit or the
benefit of third parties ,or otherwise appropriate or copy any of Lessee's
confidential information except as required in connection with Lessor's
performance of its obligations under this agreement unless Lessor can prove that
it acquired the information either before its creation, development or
disclosure by Lessee, or by other than unauthorised disclosure.
b. Confidential information is any proprietary or confidential information that
Lessor learns from Lessee or from Lessor's performance under this agreement
about Lessee's business, including trade secrets; products, processes and
services; business plans, product development plans, marketing plans or internal
business procedures; confidential and proprietary information of Lessee's
customers; test procedures and results; computer codes and hardware system
information; customer information and lists; accounting, marketing and
merchandising reports and other information generated by Lessee's operation of
the Sub-Domain Name; Lessee's patents, trademarks or other intellectual property
rights; and business methods used or developed by or for Lessee.
x. Xxxxxx acknowledges that the confidential information is the property of
Lessee, its customers, or third parties that have disclosed information to
Lessee in confidence.
10. GOOD FAITH. The parties acknowledge that circumstances outside of their
control or knowledge can affect their performance of this agreement. Each will
work with the other in good faith to resolve any problems that arise in these
circumstances.
11. REPRESENTATIONS AND WARRANTIES.
a. Lessor represents and warrants that: i. It is in good standing in Arizona and
where it operates and has the power to make this agreement.
ii. It is authorised to make and perform this agreement.
iii. It has not granted to any third party rights that could restrict or in any
way limit the Lessee's lawful use of the Domain Name.
iv. To the best of its knowledge, it owns the rights that it has granted to
Lessee under this agreement.
v. It owns the Domain Name free of any claim or potential claim by any third
party.
vi. The Domain Name are validly registered in Lessor's name.
b. Lessee represents and warrants that:
i. It is in good standing in Nevada and where it operates and has the power to
make this agreement.
ii. It is authorised to make and perform this agreement.
c. The parties' representations and warranties survive the Effective Date.
12. INDEMNITY.
a. The Lessee agrees to indemnify the Lessor and the other party's directors,
officers, employees and agents from all claims, demands, losses, liabilities,
and expenses (including reasonable legal fees) arising out of the party's breach
of this agreement.
b. Lessee indemnifies and will defend Lessor, its directors, officers, employees
and agents and hold each of them harmless from all claims, demands, damages,
losses, liabilities, suits and expenses, including reasonable legal fees arising
out of or in connection with Lessee's use of the Sub-Domain Names.
13. DEFAULT.
a. Lessee is in default if it does not make a payment or perform any other
material obligation that is required by this agreement and Lessor notifies
Lessee in writing that it is in default. If Lessee has not cured the default by
the end of thirty days from Lessee's receipt of Lessor's written notice, then
Lessor may terminate this agreement and all obligations hereunder.
x. Xxxxxx is in default if it does not perform any material obligation that is
required by this agreement and Lessee notifies Lessor in writing that it is in
default, and Lessor has not cured the default by the end of thirty days from
Lessor's receipt of Lessee's written notice.
14. TERMINATION.
a. Lessor may terminate this agreement, without prejudice to any rights that it
has under this agreement or otherwise, on written notice to Lessee if:
i. Lessee files for bankruptcy, a receiver or trustee of any of Lessee's
property is appointed and the appointment is not vacated within sixty days of
the appointment, or any order is made or resolution passed for the winding up of
Lessee for any purpose other than the bona fide reconstruction or amalgamation
of Lessee, and the order or resolution is not rescinded within sixty days of the
date of the order or resolution; or
ii. Lessee breaches any of its representations and warranties or is in default
under paragraph 12
b. Termination of this agreement under this paragraph by Lessor does not free
Lessee from it's Royalty payment or reporting requirements outlined in this
agreement.
c. If Lessee terminates this agreement, without prejudice to any rights it will
owe the Lessor a Termination fee of $2,000,000.
15. RIGHT OF FIRST REFUSAL
In the event the Lessor undertakes to sell the Domain Names it will offer the
Lessee the right of first refusal to purchase the Domain Names at the same terms
as those offered to any 3rd party. This right of first refusal will be valid for
a period of 15 days following the Lessor's written notification to the Lessee
that it intends to sell the Domain Names.
16. GENERAL PROVISIONS.
a. Time is of the essence of this agreement.
b. If either party must perform under this agreement on a day that is not a
business day in Houston Texas then the party must perform on the next business
day in Texas.
c. Any notice that must be given under this agreement must be in writing and
delivered by hand to the address given for the party on page 1 or transmitted by
fax or email to the fax number or email address that the parties have given to
each other.
Notice is deemed to have been received when it is delivered if it is delivered
during normal business hours and on the next business day if it is delivered
outside of normal business hours.
d. This agreement is the entire agreement between the parties and its terms may
be waived or amended only in writing.
e. This agreement does not create a partnership or joint venture or any other
kind of business association between the parties and neither party has the power
to bind the other in any way.
f. Lessee may not assign its interest in this agreement without Lessor's written
consent.
g. If Lessee assigns its interest in this agreement without Lessor's written
consent, Lessee will agree that the damages would be immediate and confess to a
judgment in the amount of $5,000,000
h. This agreement is binding on the parties and upon their respective
successors, assigns and any purchasers of any or all of the Domain Name.
h. This agreement must be construed in accordance with the laws of Nevada and
litigated in the courts of Nevada.
i. No finding by a court of competent jurisdiction that any provision of this
agreement is invalid, illegal, or otherwise unenforceable operates to impair or
affect the remaining provisions which remain effective and enforceable.
j. This agreement may be signed in counterparts and delivered to the parties by
fax.
The parties' signatures below are evidence of their agreement.
EXTENSION MEDIA LLC.
/s/ Xxxxx Xxxx
Authorized signatory: Xxxxx Xxxx Manager
Date: January 4, 2008
EXTENSIONS INC.
/s/ Xxxxxxxx Xxxx
Authorized signatory: Xxxxxxxx Xxxx, President
Date: January 4, 2008
