EXHIBIT 10.25
AGREEMENT
Agreement made December 20, 1996, and effective October 1, 1996, by and between
Virtual Mortgage Network, Inc., a Nevada corporation, 0000 XxxXxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 ("Virtual") and Interealty Corp., a
Colorado corporation, 0000 Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000 ("Interealty").
Background
----------
Virtual represents that it has developed and owns a mortgage loan origination
system currently known as the LoanMaker System which assists buyers of real
estate in their efforts to obtain mortgages through an interactive
video-teleconference system. Virtual has determined that, in order to be
successful, such system must be located in the offices of real estate
professionals. Interealty provides systems and services to real estate
professionals throughout the United States, and, by virtue thereof, is capable
of providing sales, marketing and promotion services which Virtual deems as
essential for its success, and which, as a start-up company, Virtual cannot
itself perform. Further, the parties wish to replace and supersede (as set forth
in the "Supersession" section of this Agreement) all prior agreements between
the parties including without limitation a Marketing and Consulting Agreement
dated November 8, 1995, as amended.
Now, therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and with the intent to be legally bound, the
parties agree as follows:
1. Definitions
-----------
a. "LoanMaker" means an interactive video-teleconference computerized
mortgage loan origination software system currently known as the
LoanMaker System which assists Realtors and buyers of real estate in
their efforts to obtain mortgages.
b. "Virtual Software" means all computer software promoted, marketed,
licensed and/or sold by Virtual, including without limitation LoanMaker,
and all upgrades, updates, modifications, enhancements, improvements,
revisions and new versions thereof.
c. "Territory" means the United States of America and Canada.
d. "Entity" means any person, firm, corporation, limited liability company,
partnership, board of Realtors, association of Realtors, real estate
broker, real estate agent, government, institution, trade association,
joint venture, consortium or any other entity of any nature.
e. "Potential Sites" means those locations at which there is potential that
Virtual Software may be successfully installed and operated.
-1-
f. "Effective Date" means October 1, 1996.
g. "Operational Term" means the period commencing on the Effective Date
and ending December 31, 2000, unless sooner terminated or extended
pursuant to Section 5 hereof.
2. Interealty Services
-------------------
Interealty agrees to provide the following services within the Territory:
a. Marketing and Promotional Services
----------------------------------
In the effort to assist Virtual in gaining market recognition for
itself and the Virtual Software, Interealty shall, during the period
from January 2, 1997 until the end of the Operational Term, perform the
following marketing and promotional services:
(1) Meet and confer with Virtual within 30 days after the date of
execution of this Agreement by both parties, with the goal of
preparing and reaching agreement on a marketing plan with
respect to activities and events during the course of the next
ensuing 12-month period to promote Virtual and Virtual
Software.
(2) Advertise and promote Virtual and virtual Software though
development and dissemination of brochures and collateral material
and by generally communicating the capabilities and advantages of
Virtual and Virtual Software to the real estate brokerage
community.
(3) Provide Virtual with relevant information in the possession of
Interealty regarding the market activities which may assist
Virtual in gaining market name recognition for itself and the
Virtual Software.
(4) Promote Virtual and Virtual Software at relevant meetings,
seminars, trade shows, conventions, written and oral
communications, and print, audio and video media.
(5) Consult with Virtual regarding marketing and public relations for
promotion approaches with respect to Virtual Software.
(6) Introduce Virtual at Interealty meetings, seminars, trade shows
and conventions.
(7) Promote Virtual on Interealty's Internet home page, providing a
link to Virtual's Internet home page.
(8) Provide Virtual with periodic assessments of the level of
satisfaction of Virtual's broker customers within the Territory,
including noted specific areas of improvement, if any.
-2-
(9) Periodically contact Entities which have obtained licenses to Virtual
Software in the Territory by telephone to determine whether they are
satisfied with the Virtual Software they have licensed and whether
they are having operational problems with such Virtual Software.
b. Sales Services
--------------
In the effort to assist Virtual in licensing Virtual Software to Entities
for their use, Interealty shall, during the Operational Term, do the
following:
(1) Assist Virtual in identifying Potential Sites.
(2) Meet with owners/operators of Potential Sites regarding their
obtaining licenses to use the Virtual Software.
(3) In those cases where Interealty is seeking to assist Virtual in
licensing LoanMaker, obtain relevant information on qualification
forms provided by Virtual regarding the likelihood that LoanMaker
would be successful.
(4) Perform such other services as reasonably requested by Virtual in the
effort to license Virtual Software to Entities.
(5) Assist Virtual in training Entities which have obtained licenses to
Virtual Software in the use thereof.
(6) Visit Entities in the Territory which have obtained licenses to
Virtual Software, as deemed necessary to determine Customer
satisfaction and issues, if any, preventing the effective use of the
Virtual Software.
c. Other Services
--------------
Interealty shall provide such other services as may be from time to time
agreed upon in writing by Interealty and Virtual.
3. Compensation/Terms of Payment
-----------------------------
In consideration of the services performed by Interealty under Section 2
hereof until the end of the Operational Term --
a. Virtual shall pay Interealty 2% of Virtual's total gross revenues after
December 31, 1996; provided, however, that, despite the amount of such
gross revenues, the total amount payable to Interealty shall be no less
than $200,000.00 per year. Amounts payable under this Section 3.a. shall
be paid as follows: At the end of each quarterly period, Virtual shall
-3-
calculate its gross revenues for such quarter, and shall, within 30 days
after the end of such quarter pay Interealty 2% of such amount or
$50,000, whichever is greater. With each such payment, Virtual shall
furnish Interealty with a written certification from Virtual's Chief
Financial Officer indicating the amount of Virtual's gross revenues
for such quarter and certifying that (i) the gross revenues for such
quarter were calculated in accordance with generally accepted
accounting practices consistently applied, and (ii) the amount of such
gross revenues is true and correct in all material respects.
b. Virtual shall pay Interealty the following: With respect to each
occasion Virtual Software is installed in a location approved by
Virtual, $900; $300 of which shall be paid within 30 days after such
installation, and $600 of which shall be paid within 30 days after the
end of the sixth month following such installation.
4. Financial Information/Audit/Reports.
-----------------------------------
a. Virtual agrees that, immediately following the end of each fiscal year,
it shall have conducted by an independent certified public accounting
firm an annual audit of its financial condition and financial results
for such fiscal year. Within 90 days after the end of each of its fiscal
years, Virtual shall furnish to Interealty, Virtual's audited financial
statements or a special report from such firm reporting the accuracy of
the gross revenues reported to Interealty by Virtual with respect to
such fiscal year in a form customary to the accounting profession.
b. Virtual shall submit monthly written reports to Interealty regarding
Virtual Software installations and locations upon which payments under
Section 3(b) are based. Interealty or its representatives shall, upon
reasonable prior notice to Virtual, have the right to review any and all
Virtual records and documents relating to System installations and
locations.
5. Operational Term Termination/Extension
--------------------------------------
a. The Operational Term may be terminated as follows:
(1) The parties may terminate the Operational Term by written agreement
executed by both parties.
(2) Either party (the "Nonbreaching Party") may terminate the Operational
Term by written notice if the other party materially breaches any of
its obligations under this Agreement and, within 30 days after
receiving written notice thereof from the Nonbreaching Party, fails
to cure such breach or commence diligent efforts toward curing such
breach.
(3) Either party may terminate the Operational Term by written notice if
any of the other party's warranties or representations under this
Agreement is materially untrue.
(4) Either party may terminate the Operational Term by written notice
following the
-4-
occurrence of any of the following events: (i) the other party
ceases doing business; (ii) the other party files for bankruptcy
or reorganization, or a petition for bankruptcy or reorganization
is filed against it and not dismissed within 60 days after such
filing; (iii) the other party makes an assignment for the benefit
of its creditors; or (iv) a receiver, conservator or trustee is
appointed for all or substantially all of the other party's
assets.
(5) Either party may terminate the Operational Term by written
notice if there is a significant change in the executive
management of the other party and subsequent to such change either
(i) the marketing or sales performance of Interealty has
materially deteriorated (when compared to performance in the
twelve-month period prior to such change) in the six-month period
subsequent to such change or (ii) the revenue of Virtual in the
six-month period subsequent to such change deteriorates materially
when compared to the revenue generation rates in the twelve-month
period prior to the change.
(6) Virtual may terminate the Operational Term by providing notice
thereof to Interealty within 30 days after the end of the
applicable period specified below, if Virtual has not, as to such
period, installed the applicable number of LoanMaker systems
specified below.
Period New LoanMaker Installations
------ ---------------------------
As of June 30, 1997 200
July 1, 1997 through June 30, 1998 280
July 1, 1998 through June 30, 1999 380
July 1, 1999 through June 30, 2000 420
b. The parties may extend the Operational Term by written agreement
executed by both parties.
6. Warranties and Representations
------------------------------
a. Virtual warrants and represents the following:
(1) It was duly incorporated and organized and is validly existing as
a corporation in good standing under the laws of the State of
Nevada.
(2) It is qualified to do business in each other State where its
activities or other reason requires such qualification.
(3) It has obtained and holds all material permits, licenses and
approvals from governmental authorities and has made all material
notifications, reports and applications to
-5-
governmental authorities which are legally required for the
operation of its business and/or for the legal and rightful
operation of LoanMaker for its intended purpose, including without
limitation any mortgage brokerage licenses (the "Permits").
Virtual is in compliance with all material requirements of all
Permits.
(4) The business of Virtual is not being conducted in violation of
any law, ordinance, rule, regulation or other legal requirement,
which would have a material adverse effect on Virtual's
operations, financial condition or prospects.
(5) Virtual developed the Virtual Software and solely and exclusively
owns good and marketable title thereto, free and clear of all
liens, encumbrances, claims, restrictions and conditions except
security interests established as part of Virtual's debt
financing.
(6) Virtual solely and exclusively owns and possesses all patents,
trademarks, service marks, trade names, trade secrets, copyrights
and other property rights associated with the Virtual Software
including without limitation the "LoanMaker" name.
(7) By entering into this Agreement and performing hereunder, Virtual
shall not be violating or breaching any other contract, agreement,
commitment, promise, understanding or arrangement, or any law,
rule or regulation.
b. Interealty warrants and represents the following:
(1) It was duly incorporated and organized and is validly existing
as a corporation in good standing under the laws of the State of
Colorado.
(2) It is qualified to do business in each other State where its
activities or other reason requires such qualification.
(3) The business of Interealty is not being conducted in violation of
any law, ordinance, rule, regulation or other legal requirement,
which would have a material adverse effect on Interealty's
operations, financial condition or prospects.
(4) By entering into this Agreement and performing hereunder,
Interealty shall not be violating or breaching any other contract,
agreement, commitment, promise, understanding or arrangement, or
any law, rule or regulation.
7. Covenants
---------
a. Each party agrees that, at all times during the Operational Term --
(1) It shall comply with all applicable laws, rules, regulations and
other legal requirements, which noncompliance would have a
material adverse affect on it or its performance.
-6-
hereunder.
(2) It shall not enter into any contract, agreement, commitment,
promise, understanding or arrangement or perform any services
which conflict with this Agreement or would prevent or hinder its
performance hereunder or create an actual or potential conflict of
interest.
(3) It will not, during the Basic Term, enter into any business in
direct competition with the other party's business (as described
in the immediately following sentence). With respect to the
immediately preceding sentence--(i) Virtual's "business" is
licensing, installing and operating a video-teleconferencing
electronic mortgage loan origination, mortgage brokerage and
mortgage banking system marketed to real estate brokerages, home
builders and relocation companies; and (ii) Interealty's
"business" is the sale/license and operation of real estate
multiple listing systems through private networks and through the
Internet.
b. Interealty covenants that it shall not, during the Operational Term and
for 12 months thereafter, develop or distribute a real estate mortgage
loan origination software system which assists buyers of real estate in
their efforts to obtain mortgages through an interactive video-
teleconference system and which competes against the System within the
Territory. Further, as to each Entity to whom Interealty has been
compensated under Section 3(b) hereunder as a result of such Entity
obtaining a license to LoanMaker, Interealty shall not, during the
Operational Term and for a period of 36 months thereafter, provide or
offer to provide a video-teleconferencing and electronic document
transfer loan origination system in competition with LoanMaker or
Virtual's "business" (as defined in Section 7.a(3) hereinabove.
c. Virtual covenants that, as to LoanMaker, it will not, during the
Operational Term, enter into any contract, agreement, commitment,
promise, understanding, arrangement or relationship which has the same
or similar purpose, intent or subject matter as this Agreement;
provided, however, that the duration of such restriction upon Virtual
shall be the Operational Term and the one-year period thereafter as to
any such contract, agreement, commitment, promise, understanding,
arrangement, or relationship by Virtual, directly or indirectly, with
any Entity which competes with Interealty's "business" (as defined in
Section 7.a.(3) hereinabove).
8. Confidential Information
------------------------
a. "Confidential Information" means any information, data, computer
software, invention, design, idea, concept, specification, formula,
device, equipment, plan, process, document or material, whether
tangible or intangible in any form or format (including, without
limiting the generality of the foregoing, information relating to
strategic information, marketing strategies or plans, and pricing
policies or plans) including without limitation all complete and
partial originals, reproductions, copies (handwritten or otherwise),
notes and other items (including
-7-
photographs), which is a trade secret or confidential or proprietary in
nature and which is (i) disclosed in writing or other tangible form by
the Disclosing Party to the Receiving Party and such writing or other
tangible form is designated thereon as "confidential" or (ii) disclosed
by the Disclosing Party to the Receiving Party other than in writing or
other tangible form and such disclosure is reduced to a writing or
other tangible form which is designated thereon as "confidential" and
delivered to the Receiving Party within 10 days after such disclosure;
provided, however, that Confidential Information does not include the
following: (1) Information which is or becomes part of the public
domain through no fault of the Receiving Party; (2) Information which
is in the possession of the Receiving Party, without binder of secrecy,
prior to receipt from the Disclosing Party; (3) Information received
from a third party without binder of secrecy; (4) Information developed
by the Receiving Party independent of the information received from the
Disclosing Party; and (5) Information which must be disclosed by the
Receiving Party by virtue of court order, subpoena, law, rule or
regulation, provided, however, that the Receiving Party shall promptly
notify the Disclosing Party of such requirement and shall, at the
request and expense of the Disclosing Party, assist the Disclosing
Party in its efforts to prevent such disclosure.
b. "Disclosing Party" means a party to this Agreement which discloses
Confidential Information to the Receiving Party. "Receiving Party"
means a party to this Agreement which receives Confidential Information
from the Disclosing Party.
c. For a period of five years after the date of receipt from a Disclosing
Party - (1) the Receiving Party shall treat all Confidential
Information received from the Disclosing Party in a secret and
confidential manner; (2) the Receiving Party shall use Confidential
Information only for the specific purpose for which it was furnished to
the Receiving Party by the Disclosing Party; (3) except as permitted
under this Section, the Receiving Party shall not, directly or
indirectly, without the prior written consent of the Disclosing Party,
reproduce, copy, disseminate, publish, furnish, disclose, provide or
otherwise make available to any person, firm, corporation, government
agency, department or other unit, partnership, association, institution
or other entity, any Confidential Information; and (4) the Receiving
Party shall provide such reasonable assistance as may be requested by
the Disclosing Party, in the effort to maintain the secrecy and
confidentiality of Confidential Information.
d. Immediately upon the request of the Disclosing Party, the Receiving
Party shall furnish to the Disclosing Party all complete and partial
originals and copies of the Confidential Information.
e. All Confidential Information, including all originals, copies,
reproductions and/or summaries thereof, shall remain the property of
the Disclosing Party. The Disclosing Party retains all rights and
remedies afforded it under patent, copyright, trade secret, trademark,
other intellectual property rights and other laws of the United States
and the states thereof, and any applicable foreign countries, including
without limitation any laws designed to protect proprietary or
confidential information. No Confidential Information shall be,
directly or indirectly, exported from the United States by the
Receiving Party or furnished to anyone
-8-
who may export it from the United States.
9. Indemnification
---------------
a. Virtual shall indemnify, defend and hold harmless Interealty and its
affiliates, successors and assigns, from and against any and all
claims, demands, actions, causes of actions, damages, liabilities,
costs and expenses (including attorney fees and costs) arising from or
connected with any claim or allegation that Virtual Software or any
warranty, representation, covenant or agreement of Virtual hereunder,
in whole or in part, conflicts with, violates or infringes any (i)
patent, copyright, trade secret, trade name, trademark, service xxxx or
other property right of any Entity or (ii) contract, agreement,
promise, commitment or arrangement of any nature that Virtual, has or
may have with any other Entity.
b. Interealty shall indemnify, defend and hold harmless Virtual and its
affiliates, successors and assigns, from and against any and all
claims, demands, actions, causes of actions, damages, liabilities,
costs and expenses (including attorney fees and costs) arising from or
connected with any claim or allegation that Interealty has, during its
marketing and promotion efforts under this Agreement, intentionally and
wrongfully made material misrepresentations to Entities regarding the
operation and capabilities of Virtual Software.
10. No Agency
---------
Nothing herein is intended to render either party an employee or agent of
the other party; and neither party shall have any right, power or authority
to make, create or negotiate any commitment, promise, obligation, warranty,
liability, agreement, contract, offer or proposal of any kind whatsoever,
express or implied, on behalf of the other party and shall not, at any
time, represent, suggest or imply that it is an agent or employee of the
other party or has any such right, power or authority.
11. Solicitation of Employees
-------------------------
During the Operational Term and for a period of one year thereafter,
neither party shall in any way, directly or indirectly, employ or retain
any employee of the other party or discuss the possibility of such
employment or retention without the prior written consent of the other
party.
12. Force Majeure
-------------
Neither party shall be liable for any failure or delay in performance under
this Agreement resulting from any cause beyond its reasonable control
including, but not limited to: acts of God; acts, errors or omissions of
civil or military authority; acts, errors or omissions of the other party;
fires; floods; epidemics; quarantine restrictions; unusually severe
weather; strikes or other labor disputes; acts, errors or omissions of any
government; wars; political strife; riots; sabotage; or compliance with any
federal, state or local laws, rules, regulations or orders.
-9-
13. Notices
-------
All notices hereunder or arising herefrom shall be in writing and shall
be delivered personally or sent prepaid by first class mail, certified
mail/return receipt requested, fax, telegram, mailgram or overnight
delivery service (including without limitation FedEx and UPS), addressed
as follows (or to such other address as the party may designate by
written notice in the manner aforesaid):
If to Interealty: Interealty Corp.
Attention: Xxxxx Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
If to Virtual: Virtual Mortgage Network, Inc.
Attention: Xxxxxxx Xxxxxx
0000 XxxXxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
14. Assignment
----------
Neither party may assign, sell, transfer, subcontract or convey this
Agreement or any of its obligations, responsibilities or liabilities
hereunder without the prior written consent of the other party. Any
such assignment, sale, transfer, subcontract or conveyance made without
such written consent shall be void.
15. Waiver
------
The failure of either party to enforce at any time any provision of this
Agreement shall not constitute a waiver of such provision in any way or
the right of such party at any time to exercise such remedies as such
party may have for any breach or breaches of such provision.
16. Headings
--------
The section headings appearing in this Agreement are for convenience of
reference only and shall not control or affect in any way the scope,
intent or interpretation of any provision of this Agreement.
17. Remedies
--------
No remedy conferred by any provision of this Agreement is intended or
shall be construed to be exclusive of any other remedy. Each and every
remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or existing at law or in equity; and the election
by a party of one or more remedies shall not constitute a waiver of the
party's right to pursue any other available remedies.
-10-
18. Supersession
------------
As of the commencement of the Operational Term, this Agreement supersedes
and replaces all prior agreements between the parties including without
limitation the Marketing and Consulting Agreement dated November 8, 1995,
except, however, that any amounts owing to Interealty by Virtual thereunder
as of the commencement of the Operational Term shall be paid to Interealty
in accordance with the provisions thereof.
19. Arbitration: Governing Law
--------------------------
Any claim, controversy or dispute between the parties with respect to the
construction or application of this Agreement, or arising out of the breach
of this Agreement, shall be resolved by arbitration in Orange County,
California in accordance with the rules of the American Arbitration
Association then in effect. This Agreement shall be governed by the
substantive and procedural laws of the State of California. The arbitrator
or arbitrators may award attorney fees and costs to the prevailing party in
the arbitration.
20. Litigation
----------
Suit in federal or state court may be brought by a party to this Agreement
only if: (i) arbitration is unavailable, (ii) a party to this Agreement is
not complying with Section 19 hereof, which requires submission of disputes
to arbitration, or (iii) necessary to enforce an arbitration award.
21. Attorney Fees and Costs
-----------------------
In the event of any dispute arising out of this Agreement or the
transactions contemplated hereunder, the prevailing party shall be entitled
to recover its reasonable attorney fees and costs from the other party.
22. Approval by Boards of Directors
-------------------------------
This Agreement is subject to the approval by the respective Boards of
Directors of Interealty and Virtual; however, unless a party, on or before
December 29, 1996, receives written notice from the other party that such
other party's Board of Directors either disapproves this Agreement or
wishes to have this Agreement modified, it shall, as of December 30, 1996,
be conclusively deemed that such other party's Board of Directors has duly
approved this Agreement exactly as set forth herein.
-11-
23. Entire Agreement: Amendments
----------------------------
This Agreement constitutes the entire and integrated agreement between the
parties, and supersedes any prior or contemporaneous agreements,
understandings or contracts regarding the subject matter hereof. This
Agreement may be amended only by written instrument executed by Interealty
and Virtual.
IN WITNESS WHEREOF, the parties hereunto set their hands as of the date first
above written.
Interealty Corp. Virtual Mortgage Network, Inc.
By: /s/ XXXXX XXXXXX By: /s/ XXXXXXX X. XXXXXX
---------------- ---------------------
Xxxxx Xxxxxx Xxxxxxx X. Xxxxxx
Title: President & CEO Title: Chairman & CEO
-12-
