Auracall Limited Agreement
Our wholly owned subsidiary, Swiftnet, Ltd., has a February 18, 2003 agreement
involving Auracall Limited, the agreement of which is titled "Formation of
Newco". The agreement provides that Xx. Xxxxxx Xxxx and Swiftnet, will establish
a company, Newco, for the purpose of developing telecommunication business based
on non-geographic numbers, which are identified in the agreement as using
Swiftnet premium numbers bands for customers to call international or national
destinations paying British Telecom directly while British Telecom payment Newco
through Swiftnet. The agreement further provides that:
a) The first stage of the budget for the company will not exceed 100,000
United Kingdom pounds;
b) Xx. Xxxx will loan 75% of the ongoing expenses for 100% of the shares
in Auracall;
c) Swiftnet will loan 25% of the ongoing expenses and provide cost plus
prices as well as management advice and technical time to receive 50% of the
shares of Newco or in case of a dilution, to receive the same amount of shares
to Xx. Xxxx;
d) Newco will repay the loans only from net profits and once the loans are
repaid, Swiftnet and Xx. Xxxx will be entitled to the exact amount of a
fee/profit share;
FORMATION OF NEWCO
1. Xx. Xxxx and Swiftnet Ltd. (Swiftnet) (or assignees) will establish a
company - Newco - for the purpose of developing telecommunication business
based on Non-geographical Numbers 1.
2. For the first stage the budget will not exceed the amount of
(pound)100,000. Any increase of the budget will require both parties'
approval.
3. Xx. Xxxx will finance by way of a loan, 75% of the ongoing expenses for
one hundred percents of the shares.
4. Swiftnet Ltd will finance by way of a loan, 25% of the ongoing expenses
and provide cost plus prices2 as well as management advice and technical
support (customer support for the first two months) for a n option, at any
time, to receive 50% of the shares of Newco or in case of a dilution, to
receive the same amount of shares as Xx. Xxxx. Swiftnet can assign this
option to any assignee as long as Swifnet continues to provide the service
according to the agreement. Swiftnet will sell the service to Newco and
will be responsible for the technical side. Swiftnet will do its best to
make the service available to Newco within 90 days. Swiftnet undertakes to
exhibit to Newco all licenses or other permissions / documents necessary
for the operation of its business.
5. Newco will repay the loans only from net profits. Any decision about
repayments will have to be decided by the board of directors with veto
rights to both sides. In case Swiftnet does not exercise its option, it
will be entitled to management fees equal to the monies that Xx. Xxxx will
be entitled to receive from Newco. It is further agreed that one the loans
are repaid, Swiftnet and Xx. Xxxx (or assignees) will be entitled to the
exact same amounts as a fee / profit share. This does not include payments
to Swiftnet for services, office rent charges to Swiftnet / Xx. Xxxx or
other similar expenses. Before any profit distribution, all loans that are
related to the parties will have to be paid back.
6. Xx. Xxxx and Swiftnet, if possible, will allow Newco to use their
respective offices for a 2-month duration without cost.
1 Activities/Services: Use of Swiftnet premium numbers bands for customers to
call International or national destinations paying BT directly while BT pays the
company (through Swiftnet).
2 Calculated by carrier cost + 15 percent to cover costs like BT's rent,
necessary infrastructure and 2411 technical support lines.
SN has the right to refuse a customer or to renegotiate percentage fee for large
customers with low margins.
e) Auracall will have the right to sell other services and products that SN
offers or will offer in the future for the best wholesale price available.
f) The company board of directors will be comprised of 4 members. 2 nominated
by SN and 2 by DK. All decisions (Expenses, recruitments, strategy,
investments, dilutions, dividends, marketing initiatives, accounting,
finance etc.) will be made by the board of directors and will not be valid
without signed minutes with signatures from at least one representative
from each side (DK and SN). In order to conduct a meeting, a quorum of
three directors, as long as there is one from each side, will be
sufficient. Signed proxies are also allowed. Both sides will have full
veto rights on any decision in the board or outside the board. Veto rights
will be effective immediately and must be exercised in writing.
g) Auracall will operate according to an agreed Business Plan (by a board
resolution) and decide on each investment and expense based on the
viability of the opportunity.
h) Both parties will make available their contacts, connections and influence
for the success of Auracall.
3. Once the current agreement SN and NL mentioned in item 1 above will be
fulfilled, DK salary will be reinstated to 50,000 Pounds P/A and SN will
receive 24,000 pounds P/A as management / consultancy fees. Further salary
/ fees increase will be agreed together mutually (DK and SN).
4. DK as the manager of the company, after the acceptance of the shares from
NL will receive the following bonus: If Auracall reaches 150,000 Pounds a
month turnover (calculated on three consecutive months, calculated based
on the Swiftnet invoice of British Telecom) within 2 years from the date
that the arrangement between SN and NL will be finalized, then Auracall
will issue to DK further shares from treasury to the level that DK will
hold 67.5% of the company and SN will hold 32.5% of the company provided
that DK is still the managing director of Auracall and holds 40 percent or
more of the shares in it.
5. This agreement will take effect after the arrangement between DK and NL
will be finalized.
6. This agreement will be governed according to the laws of England and
Wales.
/s/ Xxx Xxxxxxxxx /s/
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Xxx Xxxxxxxxx Swiftnet Ltd.
Date: 21.8.2003 Date: 21.8.03
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