ROYALTY AGREEMENT
THIS ROYALTY AGREEMENT ("Agreement") is made and entered into as of this
1st day of June, 2005 (the "Effective Date"), by and between Landbank, LLC and
its successors ("Landbank"), and Xxxx Xxxx, LLC a California limited liability
company ("GRANTOR"), with reference to the following facts:
A. GRANTOR is an affiliate of Landbank through common indirect ownership.
B. GRANTOR engages in direct-response marketing.
C. Landbank are in the business of acquiring parcels of land "in bulk" and
reselling this land as individual parcels.
C. Landbank desires to acquire from GRANTOR, and GRANTOR desires to provide
to Landbank, on the terms and conditions set forth herein, access to certain
leads generated by GRANTOR as a result of its marketing activities ("Leads").
NOW, THEREFORE, in consideration of the mutual representations, covenants
and warranties contained herein and such other valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. Definitions.
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1.1 "Gross Profits" means the total sales price paid, minus the Initial
Acquisition Cost, commissions, merchant fees, deed processing costs and returns.
"Returns" refer to sales, which sales are refunded in full within the designated
refund period.
1.2 "Initial Acquisition Cost" means the aggregate of the purchase price
and all closing and other direct costs incurred and paid by Landbank in
connection with the initial acquisition of a property, including, without
limitation, reasonable attorneys' fees, and the cost of any surveys, inspections
or other due diligence on the property, but excluding any taxes. In the event
the property consists of a subdivided portion of initially acquired property,
for purposes of determining Initial Acquisition Costs, the purchase price shall
be determined on a pro rata per acre basis.
1.3 "Lead" is defined in the preamble to this Agreement.
1.4 "Bona Fide Lead" means the name and contact information of a person
that has actually purchased (and not returned) products sold by GRANTOR.
1.5 "Term" is defined in Section 5.1.
2. Grant of Rights.
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2.1 GRANTOR hereby agrees to provide Landbank, on the terms and conditions
of this Agreement, the right during the Term to use the information from
GRANTOR's Leads for the purpose of marketing, selling and distributing
Landbank's products and services. No right to license or sublicense the Leads or
the information contained therein is granted by GRANTOR to Landbank.
3. Royalties.
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3.1 In consideration for the rights and privileges granted hereunder,
Landbank shall pay to GRANTOR in the manner hereinafter provided, a royalty
payment equal to 35% of Gross Profits generated by Landbank from sales to
GRANTOR Leads.
3.2 Royalties shall be paid monthly for all sales completed during the
quarter, within fifteen (15) days of the end of each month.
3.3 All payments herein shall be in U.S. dollars by check or wire transfer
to GRANTOR's designated bank account. Any royalties remaining unpaid more than
fifteen (15) days after the end of the month for which such royalties are due
shall thereafter bear interest at a monthly rate of 1.5%.
4. Reports and Records.
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4.1 Landbank shall keep full, true and accurate books of account containing
all particulars that may be necessary for the purpose of showing the amount
payable to GRANTOR by Landbank by way of royalties. Said books shall be kept at
Landbank's principal place of business, and shall be retained for a period of
five (5) years following the end of the calendar year to which they pertain.
4.2 GRANTOR shall have the right, not more than once every calendar year,
upon reasonable notice, to conduct an audit of said books and records for the
purpose of verifying Landbank's royalty statement. The fees and expenses of any
such audit shall be borne by GRANTOR. However, if a deficiency in royalties of
more than 5% of the total royalties due in any calendar year is discovered, then
Landbank shall be responsible for reimbursing to GRANTOR the reasonable costs of
such audit.
4.3 Landbank shall, within thirty (30) days after the end of each calendar
quarter, deliver to GRANTOR true and accurate reports, giving such particulars
of the business conducted by Landbank during the preceding three-month period as
shall be pertinent to the royalty accounting under this Agreement.
5. Term and Termination
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5.1 The term of this Agreement (the "Term") shall commence on the Effective
Date, and shall expire on the tenth anniversary thereof, unless earlier
terminated hereunder. Unless either party elects in writing at least thirty (30)
days prior to the expiration of the then current Term, this Agreement shall
continue for successive one (1) year Terms.
5.2 If Landbank shall become bankrupt or insolvent, or shall file a
petition in bankruptcy, or if the business of Landbank shall be placed in the
hands of a receiver, assignee or trustee for the benefit of creditors, whether
by voluntary act of Landbank or otherwise, this Agreement shall automatically
terminate, to the extent permitted under applicable and prevailing law.
5.3 Upon any material breach of this Agreement by Landbank, GRANTOR shall
have the right to terminate this Agreement and the rights and privileges granted
hereunder upon thirty (30) days written notice, unless Landbank shall have cured
any such breach prior to the expiration of said thirty (30) days.
5.4 Landbank shall have the right to terminate this Agreement at any time
upon sixty (60) days written notice, at any time after the 5th anniversary of
the date hereof.
5.5 Upon termination or expiration of this Agreement, neither party shall
have any further rights or obligations hereunder, provided that GRANTOR shall be
entitled to receive any accrued and unpaid royalties through the date of
termination, and provided further that nothing herein shall be construed to
release either party from any willful breach of this Agreement prior to the date
of termination.
6. Assignment.
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Neither party may assign this Agreement or any of its rights or obligations
hereunder without the prior written consent of the other party, provided,
however, that Landbank may assign its rights, together with its obligations,
under this Agreement in connection with any sale, transfer or other disposition
of all or substantially all of its business and assets; and such rights and
obligations shall inure to, and be binding upon, any successor to the business
or substantially all of the assets of Landbank, whether by merger, purchase of
stock or assets or otherwise, without any further action on the part of either
party. This Agreement shall be binding upon, and shall inure to the benefit of,
the respective successors and permitted assigns of the parties.
7. Miscellaneous.
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7.1. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California applicable to
agreements made and to be performed entirely in California.
7.2. Captions. The paragraph headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement or define, limit or extend the scope of this
Agreement or of any particular article or paragraph of this Agreement.
Masculine, feminine or neuter gender and the singular or plural number shall be
deemed to include the other(s) whenever the context so indicates or requires.
7.3. Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter of this Agreement,
and supersedes any and all prior agreements, arrangements and understandings,
written or oral, between the parties relating to the subject matter, including
without limitation any Prior Agreement.
7.4. No Other Representation. No representation, promise, inducement or
statement of intention has been made by a party that is not embodied in this
Agreement, and no party shall be bound by or liable for any alleged
representation, promise, inducement or statement of intention not so set forth.
GRANTOR represents and warrants to Landbank that GRANTOR's execution and
performance of this Agreement shall not violate any other agreement or other
requirements to which GRANTOR is subject.
7.5 Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms, conditions or
covenants of this Agreement may be waived, only by a written instrument executed
by the parties to this Agreement. The failure of a party at any time or times to
require performance of any provision of this Agreement shall in no manner affect
its right at a later time to enforce the same. No waiver by a party of the
breach of any term or covenant contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the breach
of any other term or covenant contained in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth against their respective signatures.
Landbank:
Landbank, LLC,
a California limited liability company
/s/ Xxxx Xxxxxx
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By: Xxxx Xxxxxx
Its: Member
/s/ Xxxx Xxxxxxx
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By: Xxxx Xxxxxxx
Its: Member
GRANTOR:
Xxxx Xxxx, LLC
By: Family Products, LLC
Its: Sole Member
By: Xxxx Xxxxxx
By: Member
In the case of assignment by Landbank pursuant to Section 6:
Acknowledged and agreed:
As of: January 26, 2006 (effective date of assignment)
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By: Assignee
Landbank Group, Inc., a Delaware corporation
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By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
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Title: President
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