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EXHIBIT 10.12
SERVICES AND LICENSE AGREEMENT
THIS SERVICES AND LICENSE AGREEMENT ("Agreement") is entered into as
of the 19th day of August, 1997, by and between iMALL, INC., a Nevada
corporation ("IMALL"), and KOINONIA SYSTEM CO. LTD., INC./IMALL Korea, a Korean
corporation and all of its subsidiaries, affiliates and related parties both
within the United States and any foreign counties (collectively, "KOINONIA"),
with reference to the following facts:
RECITALS:
A. iMALL has developed certain techniques, formats, procedures and
know-how for the preparation, marketing and sale of Internet products and
services. This includes information and services relating to the creation of a
large commerce enabled Internet mall ("iMALL") and marketing programs (including
a unique seminar model for selling Web sites) for the sale of those products and
services (the "Proprietary Information") and, in connection with the use and
development of the Proprietary Information, has developed or acquired certain
trademark and trade name rights in and to the name "iMALL" and certain stylized
logos, trade dressage, and stylized renderings related thereto or used in
connection therewith (collectively the "Trademarks").
B. iMALL has agreed to provide to Kononia certain services relating
to the initiation and operation of an "Internet mall" business in Korea which
are similar to the business operations of iMALL in the United States.
C. iMALL has also agreed to grant to Koinonia and Koinonia has
agreed to accept from iMALL, a license for the use of the Proprietary
Information and the Trademarks.
D. Koinonia intends to sell merchants and businesses located in
Korea two iMALL Web sites as well as other iMALL related advertising,
consulting, and web building services. The two Web sites will be nearly
identical in context except that one Web site will be in English and the other
in Hangul (Korea's native language). The English Web sites will be located on
the main iMALL server in the U.S. and the Korean Web sites will be located on an
iMALL server in Seoul, Korea.
The parties desire to memorialize the terms of their agreement by
entering into this Agreement.
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AGREEMENT
NOW, THEREFORE, for any in consideration of the foregoing recitals
and other good and valuable consideration, the parties agree as follows:
1. License to Proprietary Information. Subject to the terms of this
Agreement, and in consideration of the receipt by iMALL of the consideration set
forth in paragraph 5, iMALL hereby assigns, transfers and conveys to Koinonia,
and Koinonia hereby accepts from iMALL, a non-transferable exclusive license to
use the Proprietary Information, but only in conjunction with the use of the
Trademarks. Koinonia's license to the Proprietary Information hereunder shall
encompass, and shall be exercisable only throughout, the territory represented
by Korea (the "Territory"). Any rights with respect to the Proprietary
Information which are not expressly granted to Koinonia by the terms of this
paragraph are reserved in their entirety to iMALL.
2. License to Trademarks. Subject to the terms of this Agreement,
and in consideration of the receipt by iMALL of the consideration set forth in
paragraph 5, iMALL hereby assigns, transfers and conveys to Koinonia, and
Koinonia hereby accepts from iMALL, a non-transferable exclusive license to use
the Trademarks in conjunction with the Proprietary Information. Koinonia's
rights in the Trademarks shall encompass, and shall be exercisable only
throughout, the Territory. iMALL shall be entitled to review and shall approve
prior to use on any products, all labels, packaging and advertising using or
incorporating any of the Trademarks. Any rights with respect to the Trademarks
which are not expressly granted to Koinonia by the terms of this Agreement are
reserved in their entirety to iMALL.
3. Fee to iMALL. The total amount of consideration to be paid to
iMALL under this Agreement by Koinonia is Two Hundred Thousand Dollars (U.S.
$200,000) to be allocated as provided herein. As consideration for the training
services to be provided by iMALL pursuant to subparagraphs 4(a)(vi) - (vii),
Koinonia shall deliver to iMALL the nonrefundable sum of One Hundred and Seventy
Thousand Dollars U.S. (U.S. $170,000). As consideration for all other
obligations of iMALL under this Agreement, Koinonia shall deliver to iMALL the
nonrefundable sum of Thirty Thousand Dollars U.S. (U.S. $30,000). The total
amount owed by Koinonia to iMALL shall be paid as follows:
(i) Ten Thousand Dollars U.S. (10,000 U.S.) one day after
receipt of this Agreement.
(ii) One Hundred and Ninety Thousand Dollars U.S. ($190,000)
U.S.) within seven days of signing and registering this Agreement.
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4. Services and Duties. During the term hereof, the parties agree as
follows:
(a) iMALL's Services. iMALL agrees to provide the following
services Koinonia:
(i) iMALL will continue to supply Koinonia with an iMALL
web server, configured to operate with existing iMALL equipment, proprietary
software, and architectures. The server was set-up by iMALL's technical staff,
last month, according to 4(vii) below.
(ii) iMALL will continue to provide one "flag" on the
iMALL International Center for Korea. The flag links to a related "Internet
mall" referred to as iMALL Korea and will contain the Web sites of the merchants
Koinonia or its partners sell in each Country.
(iii) After Koinonia, or its staff, creates the foreign
merchant's iMALL Web sites, it will mirror the English language-based Web site
on the main iMALL server in the United States. This gives the millions of
English speaking iMALL visitors the opportunity to see the foreign business Web
site. The Korean iMALL Web site and the English-language based Web site will be
hosted on a server in Korea at a location mutually acceptable to iMALL and
Koinonia.
(iv) iMALL will use commercially reasonable efforts to
provide Koinonia with the identity of any persons or entities from whom or which
it receives requests for information relating to iMALL Korea.
(v) iMALL will provide, upon Koinonia's request, a total
of up to 30 consecutive days (comprised of not more than 180 hours in the
aggregate) of training to Koinonia's seminar division representatives at a
facility to be chosen by iMALL. If Koinonia requests onsite training in Korea,
it will provide business class air travel and reasonable accommodations for
iMALL's training staff, and iMALL will pay all payroll and consulting fees of
iMALL's training staff.
(vi) iMALL will provide, upon Koinonia's request, a total
of up to 30 consecutive days (comprised of not more than 180 hours in the
aggregate) of training to representatives of Koinonia's customer service
division at a training facility to be chosen by iMALL. If Koinonia requests
onsite training in Korea, it will provide business class air travel and
reasonable accommodations for iMALL's training staff, and iMALL will pay all
payroll and consulting fees of iMALL's training staff.
(vii) iMALL will provide, upon Koinonia's request, a
total of up to 30 consecutive days (comprised of not more than 160 hours in the
aggregate) of training to representatives of Koinonia's technical division
regarding the building of
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iMALL Web pages using iMALL's web building program title "iSTORE" and iMALL
server related issue. If Koinonia requests onsite training in Korea, it will
provide business class air travel and reasonable accommodations for iMALL's
training staff, and iMALL will pay all payroll and consulting fees of iMALL's
training staff.
(b) Koinonia Services. Koinonia shall provide the following
services and have the following duties:
(i) Koinonia will use its best efforts to advertise and
market, through seminars or other iMALL approved marketing means, the sale of
two Web sites, one in English and the other in Korean, and ongoing maintenance
fees.
(ii) Koinonia will construct, maintain and upgrade (as
appropriate), the Web sites it sells using iSTORE and other iMALL software
programs. iMALL's software will allow the Web sites to be built directly on
Koinonia's iMALL services to be placed in iMALL Korea.
(iii) Koinonia will maintain, in accordance with the
procedures and specifications established from time to time by iMALL, a high
level of customer service for its merchants.
(iv) Koinonia will advertise, in accordance with such
procedures as shall be established from time to time by iMALL.
(v) Koinonia will implement a system for the maintenance
ad use of small translations from English to Hangul and Hangul to English to
help in the sale of goods and services.
(vi) Koinonia will implement and maintain procedures for
following up on all potential merchants forwarded by iMALL to Koinonia pursuant
to paragraph 4(a)(iv).
5. Consideration for Training Services. In consideration of the
licenses to the Trademarks and Proprietary Information granted by iMALL to
Koinonia hereunder, Koinonia agrees to perform diligently the services and
duties described in paragraph 4b and to pay to iMALL the following:
a. An amount equal to ten percent (10%) of the gross
revenues from (1) all sales of, or revenue generated from: seminars, marketing
programs, advertising, consulting and web building services relating to the
Internet conducted by Koinonia or its affiliates, joint venturers, agents or
partners using iMALL's Proprietary Information, and (2) all maintenance fees
generated by Koinonia or its affiliates, joint venturers, partners or agents
with respect to seminars or marketing
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efforts relating to the Internet and using iMALL's Proprietary Information. All
such royalty fees shall be due and payable on a quarterly basis, within 15 days
of the end of the preceding quarter. During the term of this Agreement and for a
period of two (2) years thereafter, Koinonia will maintain records reasonably
sufficient in detail and scope to provide iMALL with a basis for verifying the
actual amount of royalty fees due with respect to any particular period. iMALL
shall bear the cost of any such audit or verification of the amounts due
pursuant to this paragraph (i), unless such an audit or review shall show that
Koinonia shall have underreported the amounts actually due by five percent (5%)
or more, and in which case Koinonia shall be solely responsible for, and pay,
all of the costs of such audit or review (and the amount by which it
underreported the amounts due); and
(b) An amount equal to 2.5% of the gross sales iMALL Korea
merchants transact through their iMALL Web site at time as Koinonia begins to
charge its merchants a percentage of sales. iMALL's brand is growing very
rapidly and iMALL USA is now able to charge its merchants 10-15% of gross sales
transacted on their iMALL Web sites. When COMMERCIALLY REASONABLE, Koinonia will
also charge a percentage of sales and iMALL will receive 2.5% iMALL's commerce
software (IRIS) will be modified to track and report these transactions.
(c) An amount equal to iMALL's cost, based on iMALL's current
billing rates, of all Web sites iMALL is asked to build. In addition, Koinonia
will supply iMALL with translations for the basis structural pages of iMALL
Korea (i.e., Home Pages and Marketplace Pages) or pay iMALL's costs in having
the translations done. All such amounts shall be payable by Koinonia to iMALL
within 15 days of Koinonia's receipt of an invoice thereafter, and
(d) An amount equal to iMALL's costs for any expenses related
to travel, including business class airfare and hotels, incurred by iMALL at the
request of Koinonia or its partners and affiliates.
Any amounts due iMALL hereunder which are not paid by Koinonia within thirty
(30) days of their due date shall bear interest, until paid in full, at the rate
of the lesser of one and one-half percent (1.5%) per month of the maximum
interest rate deity by law.
6. Consideration for Trademark. In consideration of the services to
be provided by iMALL to or for the benefit of Koinonia under the provisions of
paragraph 4(a), above, Koinonia agrees to perform diligently the services and
duties described in paragraph 4b and to pay to iMALL the following:
(a) An amount equal to five percent (5%) of the gross
revenues from (1) all sales of, or revenues generated from: seminars, marketing
programs, advertising, consulting and web building services relating to the
Internet conducted by
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Koinonia or its affiliates, joint venturers, agents or partners using iMALL's
Proprietary Information, and (2) all maintenance fees generated by Koinonia or
its affiliates, joint venturers, partners or agents with respect to seminars or
marketing efforts relating to the Internet and using iMALL's Proprietary
Information. All such royalty fees shall be due and payable on a quarterly
basis, within 15 days of the end of the preceding quarter. During the term of
this Agreement and for a period of two (2) years thereafter, Koinonia will
maintain records reasonably sufficient in detail and scope to provide iMALL with
a basis for verifying the actual amount of any royalty fees due with respect to
any particular period. iMALL shall bear the cost of any such audit or
verification of the amounts due pursuant to this paragraph (i), unless such an
audit or review shall show that Koinonia shall have underreported the amounts
actually due by five percent (5%) or more, and in which case Koinonia shall be
solely responsible for, and pay, all of the costs of such audit or review (and
the amount by which it underreported the amounts due).
7. Title. Title to the licenses granted hereunder shall not
constitute title to the underlying Proprietary Information or Trademarks, and
Koinonia hereby disclaims any claim to any right, title or interest in the
Proprietary Information or the Trademarks except as is granted it hereunder.
8. Restrictions. Without the prior written consent of iMALL (which
consent shall not be unreasonably withheld), Koinonia shall not transfer, rent,
lease, loan, sublicense, share, or otherwise transfer any right in or to the
license to the Proprietary Information or Trademarks granted to it hereunder, or
any part thereof, to any person, entity, or group and shall not use or allow any
other person (including Koinonia's representatives, agents, or employees) to use
the Proprietary Information or Trademarks outside of the Territory or allow the
sale of any product incorporating the Proprietary Information unless such
product is labeled with the Trademarks. Except as specifically provided herein,
without the prior written consent of iMALL (which may be withheld in iMALL's
sole discretion), Koinonia shall also not copy for its own use, and shall not
allow any other company, entity, or person to access, use, or copy for its own
use, and shall not allow any other company, entity, or person to access, use, or
copy any written information constituting all or a part of the Proprietary
Information on any terms which are inconsistent with the terms of this
Agreement. Koinonia hereby acknowledges and agrees that the Proprietary
Information is comprised of trade secrets and confidential information which is
the sole and exclusive property of iMALL (subject to the terms hereof), and
Koinonia diligently agrees to protect the same against transfer or disclosure
to, or discovery by, persons not specifically authorized by iMALL hereunder and
to institute or enforce such policies and procedures as shall be appropriate, in
iMALL's reasonable opinion, to ensure that its representatives, agents, and
employees maintain and observe such confidentiality and non-disclosure
restrictions.
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9. Disclaimer of Warranties. iMALL MAKES NO WARRANTY,
REPRESENTATION, OR PROMISE NOT EXPRESSLY SET FORTH IN THIS AGREEMENT AND
EXPRESSLY DISCLAIMS AND EXCLUDES ANY AND ALL IMPLIED WARRANTIES OR
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR NON-INFRINGEMENT
WITH RESPECT TO ALL OR ANY PORTION OF THE PROPRIETARY INFORMATION OR THE
TRADEMARKS. iMALL does not warrant or make any representations regarding the use
or the results of the use of the Proprietary Information and/or the Trademarks.
10. Indemnification and Limitations Thereon. Subject to the
limitations of this paragraph, iMALL will indemnify Ioinonia harmless from any
and all damages, claims, causes of action, suits, losses, liabilities, expenses
and costs, including reasonable attorneys' fees, caused by any breach of this
Agreement, including any breach of warranty, by iMALL, provided, that in no case
shall iMALL's liability to Koinonia under this paragraph exceed the
consideration actually received by iMALL hereunder. iMALL shall not be
responsible for any special, incidental, consequential, punitive, or indirect
damages, even if iMALL has been advised of the possibility of such damages.
Further, iMALL shall not be responsible for lost profits or revenue, loss of use
of any software, loss of data, costs of recreating lost date, the cost of any
substitute programs or claims by any other party other than the Koinonia.
Koinonia's sole and exclusive remedies, and iMALL's sole and exclusive
liabilities with respect to this Agreement, are set forth herein. This agreement
defines a mutually agreed upon allocation of risk, and the amount payable to
iMALL hereunder reflects such allocation of risk. Koinonia will indemnify iMALL
and hold iMALL harmless from any and all damages, claims, causes of action,
suits, losses, liabilities, expenses and costs, including reasonable attorneys'
fees, caused by any breach of this Agreement, including without limitation, any
breach of warranty, by Koinonia.
11. Governmental Approval. Koinonia shall not market, sell, or
otherwise distribute any product with utilizes or incorporates the Proprietary
Information or the Trademarks until it has obtained all required registrations,
authorizations and approvals necessary for the marketing, sale, or distribution
of such product from all appropriate governmental agencies.
12. Term and Termination. The term of this Agreement will commence
on the date first written above and will continue for a period of 10 years,
subject to earlier termination upon the occurrence of any of the following
events:
(a) At the option of iMALL, by providing written notice to
Koinonia, if Koinonia is in breach of this Agreement and has failed to cure such
breach (or to take such steps as are commercially reasonable to cure such
breach) within thirty (30) days after receiving written notice of the breach.
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(b) At the option of iMALL, by providing thirty (30) days'
written notice to Koinonia, if Koinonia decides to no longer offer, market, sell
or otherwise promote products utilizing the Proprietary Information and/or the
Trademarks, or if the amounts payable to iMALL pursuant to the provisions of
paragraph 5(a)(1) [or through a lump sum payment at the end of the period if the
quota is not met] shall be less than $200,000 during the first consecutive 12
months of this Agreement or less than $450,000 during any 12 consecutive month
period thereafter.
(c) At the option of the parties, upon their mutual written
consent.
(d) In the event of the bankruptcy, dissolution, or other
termination of the action business operations of Koinonia, or in the event of
Koinonia is individually placed into bankruptcy (and such involuntary bankruptcy
is not dismissed within 45 days), or makes a general assignment for the benefit
of its creditors.
Upon the termination of this Agreement, the rights and obligations of the
parties hereunder will cease, excepting only the following, which will continue:
(i) The rights of each party with respect to any breach of this Agreement by the
other party; and (ii) The rights and obligations set forth in paragraphs 6, 7
and 8.
13. Independent Contractors. iMALL and Koinonia are independent
contractors, and shall not be deemed employees, agents, or representatives of
one another. Neither party has a right to bind the other party to any agreement.
Unless expressly stated herein to the contrary, each party will bear all of the
expenses and costs associated with the performance of its obligations hereunder.
14. Notices. Notices will be sent to the parties at the addresses
stated at the signature lines hereto or at such other addresses as the parties
may provide to one another from time to time in writing. Notices may be sent by
facsimile, by hand delivery, or by certified, registered, or regular mail,
postage prepaid, and will be effective when actually received.
15. General Provisions.
(a) This Agreement may be amended only by a writing signed by
both parties, will be governed by and construed in accordance with the laws of
the state of Utah (without reference to choice of law rules), is neither
assignable nor or delegable by Koinonia without the written consent of iMALL,
contains the entire understanding between the parties regarding the subject
matter hereof, and supersedes any prior discussions or agreements concerning
such subject matter.
(b) This Agreement may be executed in one or more counterparts
which, together, will constitute one document.
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(c) This Agreement will not operate for the benefit of any
person or entity not a party to it.
(d) If any provision of this Agreement is found unenforceable
in whole or in part by a court, the remainder of such provision will be
construed by limiting or reducing it to preserve the enforceability to the
maximum extent permitted and compatible with applicable law.
(e) No delay in the enforcement or extension of time or
failure to exercise any right hereunder will be deemed to be a waiver of any
right by the other party.
(f) In the event of any dispute regarding this Agreement, the
parties shall submit that dispute to binding arbitration in accordance with the
provisions of the Commercial Arbitration Rules of American Arbitration
Association. Any such arbitration shall be held before one arbitrator, which
shall be mutually chosen by the parties (or in default thereof, one arbitrator
chosen by each of the parties and a third arbitrator chosen by the two
arbitrators chosen by the parties), shall be held in the State of Utah, and any
decision thereof shall be specifically enforceable by a court of law in the
State of Utah. The parties hereby specifically consent to the jurisdiction of
the courts of Utah for purposes of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
written above.
iMALL, Inc. Koinonia System Co. Ltd.
By: By:
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Xxxx Xxxxx Mr. Seo Sun Man
President President
Koinonia System Co. Ltd.
By:
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Xx. Xxxx Xxxx Xxxx
Representative
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ADDENDUM
This Addendum ("Addendum") relates to the Services and Licenses
Agreement ("Agreement") between iMALL and Koinonia. Capitalized terms not
defined herein shall have the meaning ascribed to them in the Agreement.
1. Koinonia shall pay to Xxxx Xxxxxx the sum of $2,500 per month for so long
as the Agreement is in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the day and year first written
above.
iMALL, Inc. Koinonia System Co. Ltd.
By: By:
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Xxxx Xxxxx Mr. Seo Sun Man
President President
Koinonia System Co. Ltd.
By:
-----------------------------------
Xx. Xxxx Xxxx Xxxx
Representative
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ADDENDUM
This Addendum ("Addendum") relates to the Services and Licenses
Agreement ("Agreement") between iMALL and Koinonia. Capitalized terms not
defined herein shall have the meaning ascribed to them in the Agreement.
1. Koinonia shall pay to Xxxx Xxxxxx the sum of $2,500 per month for so long
as the Agreement is in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the day and year first written
above.
iMALL, Inc. Koinonia System Co. Ltd.
By: By:
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Xxxx Xxxxx Mr. Seo Sun Man
President President
Koinonia System Co. Ltd.
By:
-----------------------------------
Xx. Xxxx Xxxx Xxxx
Representative
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