EXHIBIT 10.9
JOINT VENTURE AGREEMENT
OF
WQIA JOINT VENTURE
(A Texas General Partnership)
THIS JOINT VENTURE AGREEMENT OF WQIA JOINT VENTURE ("Agreement") is made
and entered into effective as of the 8th day of June, 2000, by and between
WorldQuest Networks, Inc. ("WQN") and Integration Services International, LTD.,
soon to be known as ISI, Inc., a Delaware corporation ("iAxys") (such entities
being hereinafter sometimes referred to collectively as "Partners" and
individually as "Partner").
W I T N E S S E T H :
In consideration of the mutual covenants set forth herein, the parties
hereto hereby agree as follows:
ARTICLE I
FORMATION OF PARTNERSHIP
1.01 Formation of Partnership.
(a) The Partners hereby join in and form a general partnership
(hereinafter referred to as the "Partnership") under and pursuant to the
Texas Revised Partnership Act for the purposes and upon the terms,
provisions, and conditions hereinafter set forth.
(b) Except as expressly provided for herein to the contrary, the
rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Texas Revised
Partnership Act. Each Partner's interest in the Partnership shall be
personal property for all purposes. All property owned by the Partnership
shall be deemed owned by the Partnership as an entity, and no Partner,
individually, shall have any ownership of such property.
1.02 Name of Partnership. The business of the Partnership shall be
conducted solely under the name of WQIA Joint Venture, or such other name as the
Partners shall determine by majority vote
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of Voting Interests (as hereinafter defined), and such name shall be used at all
times in connection with the Partnership affairs. The parties hereto shall
execute and file all assumed or fictitious name certificates required by law to
be filed in connection with the formation of the Partnership.
1.03 Purposes and Scope of Partnership.
(a) The purpose of the Partnership shall be to install, own, maintain
and operate sites for telephone circuits and Internet voice termination
equipment in Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx, Xxxxxxx, Xxxxxxxx and Guatemala
pursuant to the terms and conditions of this Agreement and Exhibits.
(b) Any Partner or any affiliate of any Partner (all of such persons
being sometimes referred to herein as "Partner Affiliates") may possess an
interest in other business ventures or investments of every nature and
description, independently or with others, including, without limitation,
the ownership, management and operation of additional telephone circuits,
Internet voice terminating equipment and related equipment and businesses,
even if they may be competitive with the business of the Partnership, and
neither the Partnership nor any of the Partners shall have any right by
virtue of this Agreement in and to such ventures or investments or to the
income or property derived therefrom, and neither Partner shall have any
fiduciary or other responsibility or duty to present any such ventures or
investments to the Partnership or the other Partner for consideration or
participation.
1.04 Scope of Partners' Authority. Except as otherwise expressly and
specifically provided in this Agreement, none of the Partners shall have any
authority to act for, or to assume any obligations or responsibility on behalf
of, any other Partner or the Partnership.
1.05 Principal Place of Business. The principal place of business of the
Partnership shall be 00000 Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, and
such other place or places as may be approved by the Partners from time to time
by majority vote of Voting Interests.
1.06 Installation and Maintenance. At no additional cost to the Partnership
other than what is provided for in Exhibits A-F and subject to the limitations
otherwise provided in this Agreement, iAxys shall be responsible for the
following:
(a) Location of sites for circuits in international markets (the
location of the six (6) Sites shall be in Xxxxxx Xxxx, Xxxxxxx,
Xxxxxxx, Xxxxxxx, Xxxxxxxx, and Guatemala) ("Sites"). The
Partners agree that on the first day of the month following the
completion and activation of the Exhibit D circuit to Karachi,
the circuits in Mexico City, Caracas and Jamaica will be removed
from the Joint Venture and returned to the complete control of
iAxys;
(b) The installation of Internet voice terminating equipment
("Equipment") at the Sites;
(c) 24 hour monitoring and maintenance of the Equipment; and
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(d) The marketing and sale of the Internet voice termination service
(the "Service").
1.07 Additional Sites. The Partners may add and/or delete Sites by
majority vote of Voting Interests, but are not obligated to, by executing an
amendment to this Agreement and adding the appropriate schedule to this
Agreement detailing the nature of that additional Site. In the event of a
deletion of a Site (or termination point - terms used interchangeably) the
Partners must by a majority vote of the Voting Interests, agree to the terms of
the deletion, but in any case the fixed obligations contracted by the Operating
Manager in compliance with the terms of this Agreement shall be paid by the
Partnership through the end of their contractual commitment. Reasons for
eliminating a Site from the Partnership may be lack of performance, under
performance or lack of strategic reason to terminate in that particular country.
In the event the right for a local termination at a Site is lost for any reason,
the Partners shall use a reasonable efforts basis to secure additional rights in
that location, or alternatively, may move the circuit to an alternative location
(country) of mutual choice by majority vote of Voting Interests.
1.08 Reasonable Business Practice. The Partners agree that in their
dealings with each other pursuant to, and subject to the terms and conditions
of, this Agreement, they shall employ reasonable business practices to manage
the Partnership and its business and assets, including 1) the selection of the
Sites, 2) the installation and maintenance of the Equipment, 3) the management
of call traffic, and 4) the reporting and accounting of Partnership activities
to the Partners, subject to the reasonable right of each Partner to review and
audit the information provided by the other Partner and subject to the other
terms and conditions of this Agreement applicable thereto.
1.09 Operating Expenses. The Partners agree that the Partnership shall
have no employees, and that, without the vote of a majority of Voting Interests,
the Partnership will incur no expenses other than the following: (a) carrier
(including satellite), local circuits, equipment and termination costs; (b)
actual out-of-pocket costs for replacement parts and maintenance of the
Equipment; (c) taxes, fees or assessments imposed on the Partnership by any
federal, state or governmental authority; (d) actual costs for the preparation
of required federal and state income, use, property and sales tax returns; and
(e) wire transfer costs and other miscellaneous costs agreed to by both parties.
iAxys will be responsible for providing to WQN documentation on all expenditures
to be made by the Partnership, along with a check request, and WQN shall be the
only Partner who is authorized to sign checks or make expenditures on behalf of
the Partnership.
1.10 Segregation of Funds. The Partners agree that WQN shall establish
one or more separate bank accounts in the name of the Partnership (the "Bank
Account(s)") for the deposit of all funds collected by the Partnership. iAxys
shall have no right to establish, open or maintain any account for the deposit
of Partnership funds and shall promptly cause all Partnership funds (this
excludes funds collected by iAxys from its customers for services it purchases
from the Partnership) coming into its possession to be forwarded to WQN for
deposit in one or more of the Bank Accounts. The Partners agree that no
Partnership funds shall be commingled with the funds of any Partner or any third
party. In addition, only the payment of the amounts authorized in Section 1.09
above or otherwise expressly authorized in this Agreement and distributions to
the Partners shall be made from any Bank Account. WQN shall have the
responsibility for setting up and managing the Bank Accounts, but in no case
shall WQN withhold distribution of all funds except a minimum balance of $1,000,
in excess of a reasonable working capital reserve designed to meet anticipated
expenditures
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arising over the next two weeks, more than three (3) working days after the end
of each calendar month, commencing with the month ending August 31, 2000.
ARTICLE II
MANAGEMENT OF PARTNERSHIP
2.01 Management of Partnership.
(a) iAxys is hereby appointed as the Operations Manager (herein so
called) of the Partnership and is hereby vested with the power and
authority for, and responsibility of, managing, supervising and conducting
the routine, day-to-day business and affairs of the Partnership, in
accordance with and subject to the provisions of this Agreement. Operations
Manager shall not receive a salary as Operations Manager. The routine, day-
to-day business and affairs of the Partnership for which Operations Manager
is responsible shall mean:
(1) preparing and delivering check requests and back-up
documentation to WQN for all Partnership expenditures so that WQN can
execute checks in payment thereof;
(2) providing WQN weekly CDR documentation for weekly xxxxxxxx;
(3) by the 8th day of each month, iAxys will provide a traffic
information report to WQN for xxxxxxxx by the Partnership to iAxys for
its traffic and for payment by the Partnership of the Partnership's
termination, satellite and teleport vendors;
(4) putting into effect resolutions and agreements of the
Partners adopted under or pursuant to this Agreement; and
(5) timely performing its responsibilities in good faith and for
the benefit of the Partnership set forth in Section 1.06 in full
compliance with all applicable United States legal requirements.
(b) WQN is hereby appointed as the Administrative Manager (herein so
called) of the Partnership and is hereby vested with the power and
authority for, and responsibility of, managing, supervising and conducting
the routine, day-to-day administrative affairs of the Partnership, in
accordance with and subject to the provisions of this Agreement.
Administrative Manager shall not receive a salary as Administrative
Manager. The routine, day-to-day administrative affairs of the Partnership
for which Administrative Manager is responsible shall mean:
(1) causing financial statements for the Partnership to be
prepared and delivered to the Partners by the last day of the
following month, except for the end of calendar quarter, which will be
due to the
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Partners on the 15th of the month following the end of such calendar
quarter; and including a statement of all accruals with each financial
statement;
(2) putting into effect resolutions and agreements of the
Partners adopted under or pursuant to this Agreement; and
(3) timely performing its responsibilities in good faith and for
the benefit of the Partnership in full compliance with all applicable
United States legal requirements.
(c) The following major decisions ("Major Decisions") affecting the
Partnership shall be implemented and undertaken by the Partnership upon the
approval thereof in writing by a majority vote of Voting Interests (except
where a unanimous vote is expressly required below), and no such Major
Decision shall be implemented or undertaken by the Partnership until it
shall have been approved in writing by a majority vote of Voting Interests
(except where a unanimous vote is expressly required below). For purposes
of this Agreement, "Voting Interests" shall mean the respective Voting
Interests of the Partners. For all purposes hereof, WQN shall be deemed to
have 51 Voting Interests and iAxys shall be deemed to have 49 Voting
Interests.
The Major Decisions shall include:
(1) entering into any agreement to which the Partnership is a
party;
(2) terminating or modifying any agreement to which the
Partnership is a party;
(3) adding, deleting or eliminating a Site;
(4) selling or disposing of Partnership assets, other than the
sale of consumable assets and supplies in the ordinary course of
business (this Major Decision requires a unanimous vote of Voting
Interests),
(5) retaining and discharging, and relying on the advice of,
attorneys, accountants, engineers and other consulting professionals;
(6) assigning Partnership property in trust for creditors or on
the assignee's promise to pay the debts of the Partnership;
(7) confessing or agreeing to a judgment against the Partnership
or settling or otherwise defending any litigation to which the
Partnership is a party;
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(8) submitting a Partnership claim or liability to arbitration;
(9) making, executing or delivering for the Partnership any
lease (of real or personal property), construction or development
agreement, real property acquisition contract, note, bond, mortgage,
deed of trust, guarantee, security or pledge agreement, indemnity
bond, surety bond or accommodation paper or accommodation endorsement;
(10) borrowing money in the Partnership name or using Partnership
property as collateral, or refinancing, recasting, modifying or
extending any loan to the Partnership or that is secured by the
property or assets of the Partnership (provided, however, that this
limitation shall not relate to ordinary trade payables and other
operating expenses of the Partnership for which supporting
documentation is required to be delivered by iAxys under Section
2.01(a));
(11) assigning, transferring, pledging, compromising or releasing
any claim or debt owing to the Partnership;
(12) assigning the right of the Partnership in specific
Partnership property (this Major Decision requires a unanimous vote of
Voting Interests); and
(13) any other decision or action which by any provision of this
Agreement is required to be approved by a majority vote of Voting
Interests.
2.02 Meetings of the Partners.
(a) Regular meetings of the Partners shall be held quarterly on the
last Thursday of the first month of each calendar quarter at 10:00 a.m. in
the offices of WQN or at such other place or places as may be determined
from time to time by a majority vote of Voting Interests. Special meetings
of the Partners shall be held when called by any Partner. Should any
meeting date fall upon a legal holiday, then such meeting shall be held at
the same time on the next regular business day. Neither written notice of
regular meetings, nor the business to be transacted at or the purpose of
regular meetings, shall be required to be delivered to Partners. Written
notice of special meetings shall be given to each Partner at least two (2)
business days before the date of the meetings. The business to be
transacted at and the purpose of any special meeting of the Partners shall
be specified in the notice of such meeting.
(b) The holding of any special meeting of the Partners shall be valid
as though timely notice of such meeting had been given if all of the
Partners attend such
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meeting, or if before or after the time of such meeting any Partner who has
not received timely notice of such meeting signs a written waiver of
notice. All such waivers shall be filed with the Partnership's records or
made a part of the minutes of the meeting.
(c) Voting may be accomplished by voice or by written ballot. No
person may act by proxy on behalf of a Partner who is present in person.
However, a Partner who is present in person may, in addition to casting his
own votes, cast the vote of a Partner who is not present but who has given
his written proxy to such Partner who is present.
(d) Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent to such action
is signed by the Partners owning the number of Voting Interests that would
have been necessary to approve the action if a meeting had been held. Such
written consent shall be filed with the minutes of the Partners' meetings
and a copy of such written consent shall be promptly delivered to the non-
signing Partner.
(e) Any action required or permitted to be taken at a meeting of the
Partners may be taken by means of a conference telephone or similar
communication equipment by means of which all Partners participating in the
meeting can hear and speak to one another, except where a Partner
participates in the meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully
called or convened.
ARTICLE III
CAPITAL OF THE PARTNERSHIP
3.01 Initial Contributions to Capital. The capital to be contributed
initially to the Partnership by the Partners shall be as follows:
(a) iAxys agrees to contribute to the Partnership all of the
Equipment installed at each of the existing Sites referenced in Section
1.06(a) as well as all Equipment purchased by iAxys but not yet installed
at such sites, free and clear of all liens, claims, charges and
encumbrances, in addition to the soft cost provided by iAxys in accordance
with Exhibits A-F, and to contribute and assign to the Partnership all
existing termination agreements to which iAxys is a party related to
termination of traffic as per Exhibits A-F in each country in which such
Sites are located, free and clear of all liens, claims, charges and
encumbrances and with the express consent of the other party to such
termination agreement. In return for such contribution, iAxys shall have a
"Partnership Percentage" equal to 50%.
(b) WQN shall contribute to the Partnership cash in the amounts set
forth on Exhibits A-F. In return for such contribution, WQN shall have a
"Partnership Percentage" equal to 50%.
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3.02 Additional Contributions or Loans to the Partnership. To the extent
that revenues of the Partnership are inadequate to provide all funds from time
to time required by the Partnership for the operation of the business of the
Partnership and additional capital contributions or loans are needed from the
Partners, as determined and called for by a unanimous vote of the Partners, each
Partner shall pay a pro rata share of any needed contribution or loan based on
the Partnership Percentage of each Partner in relation to the total Partnership
Percentages; provided, however, no Partner will be required to make any capital
contribution or loan to the Partnership unless unanimously approved by the
Partners; and, provided, further, that in any event the Partners may only
approve such costs as are reasonable and necessary in accordance with the
purposes for which the Partnership has been formed with respect to such
additional contributions or loans. If the Partners unanimously approve
additional capital contributions or loans, each Partner shall make its pro rata
contribution or loan within thirty (30) days. If such additional funds are so
approved to be made in the form of loans, the Partners agree any such loan shall
bear interest at the "prime rate" of Nations Bank, Dallas, N.A., as announced,
from time to time, plus one percent (1%), noncompounded, and shall be payable in
such manner as may be approved by unanimous vote of the Partners, but in no
event later than three (3) years following the date of the loan.
3.03 Respective Interest of Partners in the Partnership. The interests of
the Partners in the Partnership are set out opposite the name of each Partner in
Section 3.01 as Partnership Percentages. The Partners shall be liable for the
debts and losses of the Partnership in the ratio of their Partnership
Percentages.
3.04 Contributions Secured. Each Partner hereby further grants to the other
Partner a lien on its interest in the Partnership to secure payment of and the
performance of any and all obligations required or permitted hereunder.
ARTICLE IV
CAPITAL ACCOUNTS
4.01 Separate Individual Capital Accounts Shall Be Maintained for Each of
the Partners. A capital account ("Capital Account") shall be established and
maintained for each Partner. The Capital Account of each Partner shall be equal
to such Partner's initial capital contribution and (a) shall be increased by (i)
the amount of money contributed by that Partner to the Partnership, (ii) the
fair market value of property contributed by that Partner to the Partnership
(net of liabilities on the contributed property that the Partnership is
considered to assume or take subject to under section 752 of the Code), and
(iii) allocations to that Partner of Partnership income and gain (or items
thereof), including income and gain exempt from tax and income and gain
described in Treas. Regss.1.704-1(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg.ss.1.704-1(b)(4)(i), and (b) shall be decreased by (i)
the amount of money distributed to that Partner by the Partnership, (ii) the
fair market value of property distributed to that Partner by the Partnership
(net of liabilities secured by the distributed property that the Partner is
considered to assume or take subject to under section 752 of the Code), (iii)
allocations to that Partner of expenditures of the Partnership described in
section 705(a)(2)(B) of the Code,
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and (iv) allocations of Partnership loss and deduction (or items thereof),
including loss and deduction described in Treas. Reg.ss.1.704-1(b)(2)(iv)(g),
but excluding items described in clause (b)(iii) above and loss or deduction
described in Treas. Reg.ss.1.704-1(b)(4)(i) orss.1.704-1(b)(4)(iii). The
Partners' Capital Accounts also shall be maintained and adjusted as permitted by
the provisions of Treas. Reg.ss.1.704-1(b)(2)(iv)(f) and as required by the
other provisions of Treas. Reg.ss.ss.1.704-1(b)(2)(iv) and 1.704-1(b)(4),
including adjustments to reflect the allocations to the Partners of
depreciation, depletion, amortization, and gain or loss as computed for book
purposes rather than the allocation of the corresponding items as computed for
tax purposes, as required by Treas. Reg.ss.1.704-1(b)(2)(iv)(g). On the transfer
of all or part of a Partner's interest in the Partnership, as permitted by this
Agreement, the transferee shall succeed to that portion of the transferor's
Capital Account based upon the percentage interest of the transferor's
Partnership interest acquired by the transferee in accordance with the
provisions of Treas. Reg. ss.1.704-1(b)(2)(iv)(l). Loans by any Partner to the
Partnership shall not be considered contributions to the capital of the
Partnership. The capital accounts of the Partners shall not be decreased by the
payment of any salary, fee or other compensation to, or the reimbursement of any
expense incurred by, a Partner or Partner Affiliate or by the payment of
interest or principal on any loan made by a Partner.
ARTICLE V
ALLOCATIONS, DISTRIBUTIONS AND ACCOUNTING
5.01 Allocation of Profits and Losses. Profit and loss of the Partnership
shall be allocated in the following manner:
(a) Any profit realized by the Partnership shall be credited to the
Capital Accounts of the Partners as follows and in the following order of
priority:
(i) first, profit shall be allocated to the Partners pro rata
based on the ratio that the negative Capital Account balance of each
Partner bears to the aggregate negative Capital Account balances of
all of the Partners until the Capital Account balances are increased
to zero; and
(ii) any remaining profit shall be allocated to the Partners in
accordance with their respective Partnership Percentages.
(b) Any loss realized by the Partnership shall be charged to the
Capital Accounts of the Partners as follows and in the following order of
priority:
(i) Any loss shall first be charged to the Partners pro rata
based on the ratio that the positive Capital Account balance of each
Partner bears to the aggregate positive Capital Account balances of
all the Partners until the Capital Account balances are reduced to
zero; and
(ii) any remaining balance of the loss shall be charged to the
Partners in accordance with their respective Partnership Percentages.
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5.02 Funds Available for Distribution. The entire Net Cash Flow of the
Partnership shall be deemed available for distribution and shall be distributed
to the Partners in accordance with the provisions of Section 5.03. The term "Net
Cash Flow" shall mean the gross cash receipts from any source whatsoever derived
from the operation of Partnership business (or any part thereof) (but not the
proceeds of Partnership borrowings), proceeds received upon liquidation of the
Partnership in accordance with the relevant provisions hereof, and proceeds from
the sale of assets of the Partnership less, first, the payment of principal and
interest (including the payment of principal and interest on loans made by the
Partners to the Partnership) as the same become due to the holders of the
indebtedness of the Partnership, second, the payment of operating expenses of
the Partnership for such period, third, capital expenditures and fourth, such
cash reserved for working capital in excess of $1,000 plus an amount equal to
anticipated expenditures arising over the next two weeks.
5.03 Distribution of Net Cash Flow. Distributions of Net Cash Flow are to
be made in amounts determined pursuant to Sections 1.10 and 5.02, and within the
time periods set forth in Section 1.10, on the following terms and conditions
and in the following order or priority:
(a) To the Partners in accordance with their respective positive
Capital Account balances (after their Capital Accounts have been adjusted
to reflect all profit and loss allocations) until such balances are reduced
to zero; and
(b) To the Partners in accordance with their respective Partnership
Percentages any amounts of Net Cash Flow remaining after satisfaction of
the preceding priority item.
5.04 Special Allocations. Allocations of profit, loss and gain shall be
made in accordance with this Article V, but shall, notwithstanding any other
provision contained herein, be made in accordance with the following:
(a) No Partner shall be allocated net loss or deduction which will
cause a deficit balance in such Partner's Capital Account to exceed the sum
of the dollar amount of such deficit balance that such Partner is obligated
to restore within the meaning of Treasury Regulation Section 1.704-1
(b)(2)(ii)(c) as of the end of the Partnership's taxable year to which such
allocation relates plus such Partner's share of the "Partnership's Minimum
Gain", as defined in Treasury Regulation Section 1.704-2(d). Any items of
loss and deduction not allocable to Partners by reason of this provision
shall be allocated to the Partners in accordance with the Partners'
interests in the Partnership. For purposes hereof, the Capital Account of
each Partner shall be reduced (i) for any distributions that, as of the end
of such year, reasonably are expected to be made to such Partner to the
extent they exceed offsetting increases to such Partner's Capital Account
that reasonably are expected to occur during (or prior to) the Partnership
taxable year in which such distributions reasonably are expected to be made
and (ii) for the adjustments and allocations of loss and deduction
described in Treasury Regulation Section 1.704-1 (b)(2)(ii)(d). A Partner
who unexpectedly receives an
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adjustment, allocation, or distribution described in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) which causes or increases a
deficit balance in such Partner's Capital Account to exceed the sum of the
dollar amount of such deficit balance that such Partner is obligated to
restore within the meaning of Treasury Regulation Section 1.704-
1(b)(2)(ii)(c) as of the end of the Partnership's taxable year to which
such allocation relates , shall be allocated items of income and gain in an
amount and manner sufficient to eliminate such excess deficit balance as
rapidly as possible. It is the intent that this Section 5.04(a) be intended
to comply with the alternate test for economic effect set forth in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d).
(b) Notwithstanding any other provision of this Section 5.04, if
there is a net decrease in the Partnership's Minimum Gain during the
Partnership's taxable year, then the Capital Accounts of each Partner shall
be allocated items of income (including gross income) and gain for such
year (and if necessary for subsequent years) equal to that Partner's share
of the net decrease in the Partnership's Minimum Gain . This Section
5.04(b) is intended to comply with the minimum gain chargeback requirement
of Treasury Regulation Section 1.704- 2. If in any taxable year that the
Partnership has a net decrease in the Partnership's Minimum Gain, if the
minimum gain chargeback requirement would cause a distortion in the
economic arrangement among the Partners and it is not expected that the
Partnership will have sufficient other income to correct that distortion,
the Partners (acting jointly and by unanimous vote) may in their discretion
seek to have the Internal Revenue Service waive the minimum gain chargeback
requirement in accordance with Treasury Regulation Section 1.704-2(f)(4).
Furthermore, items of Partnership loss, deduction and expenditures
described in Section 705(a)(2)(B) of the Code which are attributable to any
nonrecourse debt of the Partnership and are characterized as partner
nonrecourse deductions under Treasury Regulation Section 1.704-2(j) shall
be allocated to the Partner's Capital Accounts in accordance with Treasury
Regulation Section 1.704-2(j).
(c) If taxable gain to be allocated from a sale or other disposition
includes income treated as ordinary income for income tax purposes because
it is attributable to the recapture of depreciation, such gain so treated
as ordinary income shall be allocated to and reported by the Partners in
proportion to their accumulated depreciation allocations; and the
Partnership shall keep (or shall obtain) records of such allocations.
5.05 Accounting and Tax Status.
(a) The fiscal year of the Partnership shall end on December 31 of
each year.
(b) The books of account of the Partnership shall be kept and
maintained at all times at the principal place of business of the
Partnership. The
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books of account shall be maintained on a cash or accrual basis as may be
approved by a majority vote of Voting Interests upon advice of WQN's
accountants, and shall show all items of income and expense.
(c) The Administrative Manager shall be responsible for having
unaudited statements prepared and furnished to each of the Partners in
accordance with the requirements of Section 2.01(a)(3) showing the cash
receipts and disbursements for the Partnership for such month or quarter,
as applicable, the unpaid balance due under all obligations of the
Partnership, and all other information reasonably requested by any Partner.
The Administrative Manager shall also cause to be prepared and furnished to
each of the Partners within thirty (30) days after the close of each fiscal
year a balance sheet of the Partnership dated as of the end of the fiscal
year, and a related statement of income or loss for the Partnership for
such fiscal year.
(d) Each Partner or their respective authorized representative shall
have the right at all reasonable times during usual business hours to
audit, examine, and make copies of or extracts from the books of account of
the Partnership. Such right may be exercised through any agent or employee
of such Partner designated by such Partner or by an independent public
accountant designated by such Partner. Each Partner shall bear all expenses
incurred in any examination made for such Partner's account.
(e) Any provision hereof to the contrary notwithstanding, solely for
United States federal income tax purposes, each of the Partners hereby
recognizes that the Partnership will be subject to all provisions of
Subchapter K of Chapter 1 of Subtitle A of the United States Internal
Revenue Code of 1986; provided, however, the filing of U.S. Partnership
Returns of Income shall not be construed to extend the purposes of the
Partnership or expand the obligations or liabilities of the Partners. At
the request of any Partner, the Partnership shall file an election under
Section 754 of the United States Internal Revenue Code of 1986.
(f) The Administrative Manager shall cause to be prepared all tax
returns and statements, if any, which must be filed on behalf of the
Partnership with any taxing authority to be furnished to WQN and iAxys, for
approval by WQN and iAxys, prior to thirty (30) days prior to the filing
date for any such return, and on approval thereof by WQN and iAxys, the
Administrative Manager shall make timely filing thereof.
(g) For accounting and federal and state income tax purposes, except
as herein otherwise specifically provided, all income, deductions, credits,
gains and losses of the Partnership shall be allocated to the Partners in
accordance with their Partnership Percentages. Any item which is stipulated
to be an expense of the Partnership under the terms of this Agreement or
which would be so treated in accordance with generally accepted accounting
principles shall be treated as an
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expense of the Partnership for all purposes of computing net income for
federal income tax purposes.
(h) WQN shall be the "tax matters" partner.
ARTICLE VI
TERM, DISSOLUTION AND TERMINATION
6.01 Term. The Partnership shall be in effect for a term beginning on the
date hereof and shall continue until December 31, 2056, unless sooner terminated
and liquidated in accordance with the provisions hereof or by written agreement
of all of the Partners.
6.02 Dissolution. The Partnership shall dissolve upon the occurrence of any
of the following events:
(a) If any Partner shall file a voluntary petition under any
bankruptcy or insolvency law or under the reorganization provisions of the
United States Bankruptcy Act or under the provisions of any law of like
import, or makes a general assignment of its property for the benefit of
creditors, or if an involuntary petition is filed against any Partner under
any bankruptcy, insolvency, or reorganization provision of any law or if a
receiver for any Partner or for the property of any Partner shall be
appointed without the acquiescence of such party and if such proceedings
are not stayed or terminated within the ninety (90) day period following
such occurrence, the Partnership shall dissolve automatically, unless the
remaining Partner elects to waive such dissolution event and continue the
Partnership within thirty (30) days after expiration of such ninety (90)
day period.
(b) If all or substantially all of the assets and properties of the
Partnership are sold.
(c) If the Partnership ceases to own, operate or manage at least one
Site.
(d) Upon the unanimous vote of the Partners.
Neither Partner shall have the right to withdraw from the Partnership prior
to its dissolution.
6.03 Final Accounting. Upon a dissolution of the Partnership pursuant to
Section 6.01 or 6.02 the Partnership shall be wound up and terminated.
6.04 Liquidation and Priorities on Termination. Upon the occurrence of
any event which causes the dissolution of the Partnership, the Partners, acting
by a majority vote of Voting Interests, shall immediately proceed to terminate
the business of the Partnership. In such event,
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the Partners may secure independent appraisals of the fair market value of each
Partnership asset and attempt to sell all Partnership properties at such prices
and/or terms as shall be approved by a majority vote of Voting Interests.
Following dissolution and liquidation, all assets shall be distributed in
accordance with the following priorities:
(a) First, to the Partnership creditors (including Partners who are
creditors pursuant to loans made by such Partners to the Partnership) in
order of priority as provided by law;
(b) Second, to the Partners in respect to the amounts remaining in
their respective Capital Accounts; and
(c) Third, there shall then be distributed to the Partners such funds
and/or properties, if any, remaining, in proportion to their respective
Partnership Percentages.
A deficit in the Capital Account of a Partner is expressly deemed not to be
an asset of the Partnership. A Partner having a deficit balance in its Capital
Account shall have no obligation to the Partnership or to the other Partner to
restore such deficit balance, nor shall its Partnership interest be subject to
surcharge or to liability by reason of such deficit balance. Notwithstanding the
foregoing, any Partner who has failed to pay a note payable to the Partnership
shall be liable for payment in full of such note.
6.05 Termination Option. At the end of 90 days, at the election of either
Partner, by giving written notification, the Partnership may be terminated upon
mutually agreeable terms.
ARTICLE VII
OWNERSHIP OF PARTNERSHIP PROPERTY
7.01 Partnership Property. All property acquired by the Partnership in the
course of Partnership business with Partnership funds or debt obligations of the
Partnership, or contributed to the Partnership, shall be owned by the
Partnership, such ownership being subject to the other terms and provisions of
this Agreement. Each Partner hereby expressly waives the right to require
partition of any Partnership property or any part thereof.
7.02 Non-Partnership Property. Any property owned by a Partner, or any
person or entity affiliated therewith, prior to the formation of this
Partnership (other than property to be contributed to the Partnership pursuant
to the terms of this Agreement), and which property is allowed by such owner to
be used by the Partnership in the course of Partnership business, shall remain
solely the property of such owner and the Partnership shall have no ownership
interest therein, except to the extent provided by an agreement, if any, between
such owner and the Partnership. The foregoing provision in this Section 7.02
shall apply also to any property acquired by a Partner, or any person or entity
affiliated therewith, after the formation of this
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Partnership, provided such acquisition was made without use of Partnership funds
or debt obligations and not in violation of Section 1.03(b) hereof.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Events of Default.
(a) If any Partner fails to perform any of its respective obligations
hereunder (including, without limitation, a failure to timely make a
capital contribution or loan approved under Section 3.02), or under a note
payable to the Partnership, the other Partner (the "Non-Defaulting
Partner") shall have the right to give such party ("Defaulting Partner") a
notice of default ("Notice of Default"). The Notice of Default shall set
forth the nature of the obligation which the Defaulting Partner has not
performed.
(b) If, within the thirty (30) day period following receipt of the
Notice of Default, the Defaulting Partner cures such default it shall be
deemed that the Notice of Default was not given and the Defaulting Partner
shall lose no rights hereunder. If, within such thirty (30) day period, the
Defaulting Partner does not cure such default, the Non-Defaulting Partner
may elect any of the following rights and/or remedies:
(i) The Non-Defaulting Partner may advance to the Partnership
the Defaulting Partner's portion of any capital contribution or loan
as is required, and the amount so advanced by the Non-Defaulting
Partner shall be owing and be repaid forthwith by the Defaulting
Partner to the Non-Defaulting Partner, and until repaid shall bear
interest at the greater of (a) the maximum rate of interest permitted
at such time under applicable law, or (b) fifteen percent (15%), on
the amount from time to time owing to the Non-Defaulting Partner by
the Defaulting Partner. Until repaid, such amounts, together with
interest hereon as aforesaid, shall be secured by a first lien against
all sums received or to be received by the Defaulting Partner in the
repayment of loans and out-of-pocket expenditures already made by the
Defaulting Partner to or on behalf of the Partnership and against all
other interests of the Defaulting Partner in the Partnership and in
the assets and all monies derivable thereunder or therefrom, all of
which interests of the Defaulting Partner are hereinafter collectively
referred to as the "Defaulting Partner's Interest", and said lien may
be perfected by filing financing statements executed by the Non-
Defaulting Partner pursuant to the Uniform Commercial Code; and all
distributions from the Partnership which otherwise would be made to
the
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Defaulting Partner (whether before or after dissolution of the
Partnership) instead shall be paid to the Non-Defaulting Partner until
the loan and all interest accrued on it have been paid in full to the
Non-Defaulting Partner (with payments being applied first to accrued
and unpaid interest and then to principal);
(ii) The Non-Defaulting Partner may, at its option, borrow on
behalf of the Defaulting Partner, from any lender acting in good
faith, on such terms and conditions, and at such rate of interest, as
determined by the Non-Defaulting Partner and such lender, an amount
equal to the Defaulting Partner's portion of such advance as required,
and advance such amount, on behalf of the Defaulting Partner, to the
Partnership, and charge the Defaulting Partner all costs and expenses
reasonably incurred by the Non-Defaulting Partner in connection with
the amount so borrowed and advanced at the same rate as that charged
by such lender and such advance shall, to the extent thereof, be and
constitute a first lien and charge on and against the Defaulting
Partner's Interest;
(iii) If the default of the Defaulting Partner shall continue
beyond the period set forth in Section 8.01(b), thereafter, the Non-
Defaulting Partner shall have the right to acquire in full the said
Defaulting Partner's Interest in the Partnership for a purchase price
equal to the amount for which the Defaulting Partner is in default;
(iv) The Non-Defaulting Partner is hereby irrevocably
authorized, instructed and directed for and on behalf of and as
attorney for the Defaulting Partner to execute any and all documents
required to be executed pursuant to the provisions hereof, including,
without limitation, executing UCC Financing Statements in the name,
and on behalf, of the Defaulting Partner, and to do all such other
things as may be necessary or advisable in connection therewith, it
being expressly understood and intended by each of the Partners that
the grant of the foregoing power of attorney is coupled with an
interest to do so;
(v) The Non-Defaulting Partner has the right, in addition to
the other rights and remedies granted to such Non-Defaulting Partner
pursuant to this Agreement or available to such Non-Defaulting Partner
at law or in equity, to take any action (including, without
limitation, court proceedings), including exercising any other rights
and remedies available at law or in equity, the Non-Defaulting Partner
may deem appropriate to obtain payment by the Defaulting Partner of
the loan and all
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accrued and unpaid interest on it, at the cost and expense of the
Defaulting Partner; and
(vi) Anything in this Agreement to the contrary notwithstanding,
it is further understood and agreed that, during the period of such
default, the Non-Defaulting Partner shall be vested with and
authorized to make all decisions, do all acts, and sign all documents
required, which shall be binding on the Partnership and on each of the
parties hereto without requiring the approval, consent or affirmative
vote of the Defaulting Partner.
(c) Each Partner grants to the other Partner with respect to any
loans made by Non-Defaulting Partner to that Partner as a Defaulting
Partner pursuant to Section 8.01(b), as security, equally and ratably, for
the payment of all loans and interest accrued on them made by Non-
Defaulting Partner to that Partner as a Defaulting Partner pursuant to
Section 8.01(b), a security interest in and a general lien on such
Defaulting Partner's Interest in the Partnership and the proceeds thereof,
all under the Uniform Commercial Code of the State of Texas. On any default
in the payment of such a loan or interest accrued on it, the Non-Defaulting
Partner is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Texas with respect to the
security interest granted in this Section 8.01(c) or in Section 8.01(b).
Each Partner shall execute and deliver to the other Partner all financing
statements and other instruments the Non-Defaulting Partner may request to
effectuate and carry out the preceding provisions of this Section 8.01(c)
or of Section 8.01(b). At the option of the Non-Defaulting Partner, this
Agreement or a carbon, photographic, or other copy hereof may serve as a
financing statement.
ARTICLE IX
RESTRICTIONS ON TRANSFERS OF PARTNERSHIP INTERESTS
9.01 Restrictions on Transfer.
Neither Partner shall sell, assign, transfer, pledge, hypothecate or
otherwise dispose of all or any portion of such Partner's interest in the
Partnership now or hereafter owned or held by such Partner, or of any
interest therein, without the prior written consent of the other Partner,
which may be withheld in such other Partner's sole and absolute discretion,
and any purported sale, assignment, transfer, pledge, hypothecation, or
other disposition of all or any portion of a Partner's interest in the
Partnership, or of any interest therein, in violation of this Section 9.01
shall be void and of no force or effect.
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ARTICLE X
GENERAL
10.01 Notices.
(a) All notices or requests provided for or permitted to be given
pursuant to this Agreement must be in writing and shall be sufficiently
given if personally delivered or mailed by certified or registered mail,
return receipt requested, addressed to the party to be notified, post-paid,
and registered or certified with return receipt requested, or by delivering
such notice in person to such party. Notices given or served pursuant
hereto shall be deemed to have been delivered on the date personally
delivered or so deposited in the mail.
(b) All notices to be sent to the Partners shall be sent to or made
at the addresses set forth beside their signatures hereto.
(c) By giving to the other party at least ten (10) days' written
notice thereof, the parties hereto and their respective successors and
assigns shall have the right from time to time and at any time during the
term of this Agreement to change their respective addresses and each shall
have the right to specify as his address any other address within the
United States of America.
10.02 GOVERNING LAWS. THIS AGREEMENT AND THE OBLIGATIONS OF THE PARTNERS
HEREUNDER SHALL BE INTERPRETED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS. THE PARTNERS AGREE THAT ANY DISPUTE WITH REGARD TO
THIS AGREEMENT SHALL BE BROUGHT IN THE STATE OR FEDERAL COURTS LOCATED IN DALLAS
COUNTY, TEXAS AND EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
SUCH COURTS.
10.03 Entire Agreement. This Agreement contains the entire agreement
between the parties hereto relative to the formation of a Partnership to
acquire, develop, own and operate the Sites identified in Section 1.03. No
variations, modifications, or changes herein or hereof shall be binding upon any
party hereto unless set forth in a document duly executed by or on behalf of
such party.
10.04 Waiver. No consent or waiver, express or implied, by any Partner to
or of any breach or default by any other in the performance by any other of his
obligations hereunder shall be deemed or construed to be a consent or waiver to
or of any other breach or default in the performance by any such other party of
the same or any other obligations of such Partner hereunder. Failure on the part
of any Partner to complain of any act or failure to act of the other Partner or
to declare the other Partner in default, irrespective of how long such failure
continues, shall not constitute a waiver of such Partner of its rights
hereunder.
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10.05 Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
10.06 Status Reports. Recognizing that each party hereto may find it
necessary from time to time to establish to third parties such as accountants,
banks, mortgagees or the like, the then current status of performance hereunder,
each party agrees, upon the written request of the other, made from time to
time, to furnish promptly a written statement (in recordable form, if requested)
on the status of any matter pertaining to this Agreement.
10.07 Amendments. This Agreement shall not be amended, modified or altered
except in writing approved by each of the Partners.
10.08 Terminology. All personal pronouns used in this Agreement, whether
used in the masculine, feminine, or neuter gender, shall include all other
genders; the singular shall include the plural, and vice versa. Titles of
Articles and Sections are for convenience only, and neither limit nor amplify
the provisions of the Agreement itself, and all references herein to Articles,
Sections or subdivisions thereof shall refer to the corresponding Article,
Section or subdivision thereof of this Agreement unless specific reference is
made to such Articles, Sections or subdivisions of another document or
instrument.
10.09 Binding Agreement. This Agreement shall inure to the benefit of and
be binding upon the undersigned Partners and their respective heirs, executors,
legal representatives, successors and assigns. Whenever, in this instrument, a
reference to any party or Partner is made, such reference shall be deemed to
include a reference to the heirs, executors, legal representatives, successors
and assigns of such party or Partner.
10.10 Payment of Costs and Expenses. The Partnership shall be responsible
for paying all costs and expenses of conducting its business, including, without
limitation, legal fees, costs of employees (if any), utilities, rent, costs of
furniture, fixtures, equipment and supplies, insurance premiums, taxes,
advertising expenses and office supplies; but expressly excluding accounting
fees and fees and expenses relating to forming and organizing the Partnership,
which shall be the sole responsibility of WQN without reimbursement by the
Partnership. In the event any such costs and expenses are or have been paid by a
Partner on behalf of the Partnership, then, except as expressly provided to the
contrary in this Agreement, such Partner shall be entitled to be reimbursed for
such payment so long as such cost or expense was reasonably necessary and is
reasonable in amount and is incurred in connection within the ordinary course of
business of the Partnership.
10.11 Assumed Business Name Certificates. The Partners agree to file such
assumed business name and other similar certificates as may be required by
applicable law. Operations Manager shall be responsible for determining where
such certificates are required to be filed, other than in the State of Texas.
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10.12 Traffic Billed to iAxys. iAxys hereby agrees to pay the Partnership
by the 18th day of each month for the traffic billed by the Partnership to iAxys
for the preceding month, as set forth in the reports required to be delivered by
iAxys to WQN pursuant to Section 2.01(a)(4).
IN WITNESS WHEREOF, this Agreement is executed effective as of the date
first set forth above.
ADDRESS: WORLDQUEST NETWORKS, INC.
00000 Xxxxxx Xxxxxxx, Xxxxx 000 By: /s/ Xxxx X. Xxxx
----------------
Xxxxxx, Xxxxx 00000 Xxxx X. Xxxx, CFO
INTEGRATION SERVICES INTERNATIONAL, INC.
(soon to be known as iAxys, Inc.)
_______________________ By: /s/ Xxxxxxx Xxxxxx
------------------
_______________________ Xxxxxxx Xxxxxx
General Manager
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Exhibit A
Mexico City, Mexico
1. iAxys will route Mexico traffic from wholesale customers through
iAxys' switch.
2. The minutes sold through this circuit will initially be sold at $0.043
to $0.049 (US) per minute -such rate may be adjusted from time to time
by the parties hereto as the wholesale market requires.
3. The parties shall pay the local termination partner $0.095 (US) per
minute for termination which shall include the local office operation
only so long as the circuit is up and operational. The cost of local
phone lines will be as reported to the JV by the local termination
partner.
4. The termination charge may be adjusted from time to time as market
conditions require through mutual consent of the parties.
5. The parties shall pay satellite capacity of 512 kbps, at $8,000 per
month for the period of 1 year. The contract for said capacity shall
be in the name of iAxys.
6. The parties hereto will split the remaining margin from the sale of
minutes 50% to WQN and 50% to iAxys.
7. WQN's initial capital investment is to be $0. iAxys' initial capital
investment is to be $0. This circuit is being contributed to the JV as
a good faith contribution by iAxys in exchange for the funding WQN is
to provide on Schedules D, E & F.
8. Example of Initial Circuit Economics:
Sale Price 0.046 Per minute
Termination cost 0.0095
Local lines cost 0.015
Satellite cost 0.0133 50% 50%
-------
Margin 0.0085 0.00425 0.00425
=======
9. If at any time the circuit becomes a 100% WQN retail utilized circuit
the margin sharing will be 50% to each for the amount between cost and
the prevailing wholesale price for this termination location and 100%
to WQN between the Wholesale price and the retail price. The
termination charge may be adjusted from time to time as market
conditions require through mutual consent of the parties.
10. The parties agree that this circuit shall be sold to the customer
willing to pay the highest wholesale rate for the circuit. The
customer may be WQN.
11. The parties hereto agree that on the first day of the month following
the completion and activation of the Schedule D circuit to Karachi
this schedule and circuit will be removed from the JV and returned to
the complete control of iAxys.
/s/ Xxxx X. Xxxx /s/ Xxxxxxx Xxxxxx
---------------- ------------------
WorldQuest Networks iAxys
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Schedule B-1
Caracas, Venezuela (Outbound Termination)
1. iAxys will route Caracas traffic from wholesale customers through
iAxys' switch.
2. The minutes sold through this circuit will initially be sold at $0.07-
0.09 (US) per minute -such rate may be adjusted from time to time by
the parties hereto as the wholesale market requires.
3. The parties shall pay the local termination partner $0.005 (US) per
minute for termination which shall include the local office operation
only so long as the circuit is up and operational. The cost of local
phone lines will be as reported to the JV by the local termination
partner. The termination charge may be adjusted from time to time as
market conditions require through mutual consent of the parties.
4. The parties shall pay satellite capacity of 128 kbps, at $2,000 per
month for the period of 1 year. The contract for said capacity shall
be in the name of iAxys.
5. The parties hereto will split the remaining margin from the sale of
minutes 50% to WQN and 50% to iAxys.
6. WQN's initial capital investment is to be $0. iAxys' initial capital
investment is to be $0. This circuit is being contributed to the JV as
a good faith contribution by iAxys in exchange for the funding WQN is
to provide on Schedules D,E & F.
7. Example of Initial Circuit Economics:
Sale Price 0.08 Per minute
Termination 0.005
Satellite 0.018
Local Lines 0.036 50% 50%
-------
Margin 0.021 0.0105 .0105
=======
8. If at any time the circuit becomes a 100% WQN retail utilized circuit
the margin sharing will be 50% to each for the amount between cost and
the prevailing wholesale price for this termination location and 100%
to WQN between the Wholesale price and the retail price. The
termination charge may be adjusted from time to time as market
conditions require through mutual consent of the parties.
9. The parties agree that this circuit shall be sold to the customer
willing to pay the highest wholesale rate for the circuit. The
customer may be WQN.
10. The parties hereto agree that on the first day of the month following
the completion and activation of the Schedule D circuit to Karachi
this schedule and circuit will be removed from the JV and returned to
the complete control of iAxys.
/s/ Xxxx X. Xxxx /s/ Xxxxxxx Xxxxxx
---------------- ------------------
WorldQuest Networks iAxys
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Schedule B-2
Caracas, Venezuela (Inbound Termination)
See Sample Calculations Attached
1. iAxys will route international traffic originating from Caracas and
terminating throughout the world through iAxys' switch. These minutes
are sold to both wholesale and retail customers.
2. Sales price for the minutes sold through this circuit is provided by
various carriers.
3. The parties shall pay satellite capacity of 128 kbps, at $ 2,000 per
month for the period of 1 year. The contract for said capacity shall
be in the name of iAxys.
4. Third party carrier charges iAxys wholesale prices plus a 5%
commission over wholesale as a management fee.
5. For business done with Agent X, revenue is collected mostly from
credit cards immediately. In some cases Agent X collects locally in
Caracas via prepayment or payment is made via wire-transfer within due
date of 30 days. iAxys pays Agent X 15% commission based on sales
price.
6. For business done with Agent Y, revenue is collected directly from
Agent Y's customers or Agent Y is responsible for remitting payment
within 15 days of invoicing. Agent Y does not receive any commission
payment.
7. iAxys receives a 15% administration fee to oversee the accounting,
invoicing, and administrative functions necessary to properly transact
business in this arena.
8. The parties hereto will split the remaining margin from the sale of
minutes 50% to WQN and 50% to iAxys.
9. WQN's initial capital investment is to be $0. iAxys's initial capital
investment is to be $0. This circuit is being contributed to the JV as
a good faith contribution by iAxys in exchange for the funding WQN is
to provide on Schedules D, E, & F.
10. The parties hereto agree that on the first day of the month following
the completion and activation of the Schedule D circuit to Karachi
this schedule and circuit will be removed from the JV and returned to
the complete control of iAxys.
11. For sample circuit economics, please see attached spreadsheet:
"Caracas, Venezuela (Inbound Termination) Calculations
/s/ Xxxx X. Xxxx /s/ Xxxxxxx Xxxxxx
---------------- ------------------
WorldQuest Networks iAxys
-23-
Schedule C
Jamaica
1. iAxys will route Jamaica traffic from wholesale customers through
iAxys' switch.
2. The minutes sold through this circuit will initially be sold at $0.20
(US) per minute -such rate may be adjusted from time to time by the
parties hereto as the wholesale market requires.
3. The parties shall pay the local termination partner approximately
$0.13 (US) per minute for termination which shall include the local
office operation only so long as the circuit is up and operational.
The cost of local phone lines will be as reported to the JV by the
local termination partner and is included in the $0.13 estimated
termination rate. The termination charge may be adjusted from time to
time as market conditions require through mutual consent of the
parties.
4. The parties shall pay satellite capacity of 256 kbps, at $4,000 per
month for the period of 1 year. The contract for said capacity shall
be in the name of iAxys.
5. The parties hereto will split the remaining margin from the sale of
minutes 50% to WQN and 50% to iAxys.
6. WQN's initial capital investment is to be $0. iAxys' initial capital
investment is to be $0. This circuit is being contributed to the JV as
a good faith contribution by iAxys in exchange for the funding WQN is
to provide on Schedules D,E & F.
7. Example of Initial Circuit Economics:
Sale Price $ 0.20 Per minute
Termination cost 0.13
Local Line cost Included
Satellite cost 0.013 50% 50%
-------
Margin 0.0607 0.03035 0.03035
=======
8. If at any time the circuit becomes a 100% WQN retail utilized circuit
the margin sharing will be 50% to each for the amount between cost and
the prevailing wholesale price for this termination location and 100%
to WQN between the Wholesale price and the retail price. The
termination charge may be adjusted from time to time as market
conditions require through mutual consent of the parties.
9. The parties agree that this circuit shall be sold to the customer
willing to pay the highest wholesale rate for the circuit. The
customer may be WQN.
10. The parties hereto agree that on the first day of the month following
the completion and activation of the Schedule D circuit to Karachi
this schedule and circuit will be removed from the JV and returned to
the complete control of iAxys.
/s/ Xxxx X. Xxxx /s/ Xxxxxxx Xxxxxx
---------------- ------------------
WorldQuest Networks iAxys
-24-
Schedule D
Karachi, Pakistan
1. iAxys will route Karachi traffic from wholesale customers through
iAxys' switch.
2. The minutes sold through this circuit will initially be sold at $0.40
(US) per minute -such rate may be adjusted from time to time by the
parties hereto as the wholesale market requires.
3. The parties shall pay the local termination partner $32,200 (US) per
month for termination which shall include the local office operation
only so long as the circuit is up and operational. In addition, there
is an estimated $2,000 monthly site rental fee. The cost of local
phone lines will be as reported to the JV by the local termination
partner. The termination charge may be adjusted from time to time as
market conditions require through mutual consent of the parties.
4. The parties shall pay satellite capacity of 256 kbps, at $6,765 per
month for the period of 1 year, with a right of rescission upon 30
days notice. The parties shall pay the London teleport operator $4,780
per month for the period of 1 year, with a right of rescission upon 30
days notice after the first three months of the contract. The parties
shall pay the Fiber transport operator $4,000 per month for the period
of one year. The contracts for said satellite capacity and teleport
operation shall be in the name of iAxys.
5. The parties hereto will split the remaining margin from the sale of
minutes 50% to WQN and 50% to iAxys.
6. WQN's initial capital investment is to be $135,730. iAxys' initial
capital investment is to be $135,730. according to the attached Budget
for capital expenses.
7. Example of Initial Circuit Economics: See Attached Spreadsheet:
"Karachi Calculations"
8. If at any time the circuit becomes a 100% WQN retail utilized circuit
the margin sharing will be 50% to each for the amount between cost and
the prevailing wholesale price for this termination location and 100%
to WQN between the Wholesale price and the retail price. The
termination charge may be adjusted from time to time as market
conditions require through mutual consent of the parties.
9. The parties agree that this circuit shall be sold to the customer
willing to pay the highest wholesale rate for the circuit. The
customer may be WQN.
/s/ Xxxx X. Xxxx /s/ Xxxxxxx Xxxxxx
---------------- ------------------
WorldQuest Networks iAxys
-25-
Schedule E
Barbados
1. iAxys will route Barbados traffic from wholesale customers through
iAxys' switch.
2. The minutes sold through this circuit will initially be sold at $0.22
(US) per minute -such rate may be adjusted from time to time by the
parties hereto as the wholesale market requires.
3. The parties shall pay the local termination partner 20% of gross
margin per month (US) for termination which shall include local
administration only so long as the circuit is up and operational.
Alternatively, a fixed consulting rate agreement for local
administration may be implemented if believed by the JV to be more
beneficial. The cost of local offices and local phone lines will be as
reported to the JV by the local termination partner. The termination
charge may be adjusted from time to time as market conditions require
through mutual consent of the parties.
4. The parties shall pay satellite capacity of 256 kbps, at $4,000 per
month for the period of 1 year. The contract for said capacity shall
be in the name of iAxys.
5. The parties hereto will split the remaining margin from the sale of
minutes 50% to WQN and 50% to iAxys.
6. WQN's initial capital investment is to be $118,000. iAxys' initial
capital investment is to be $118,000 according to the attached Budget
for capital expenses.
7. Example of Initial Circuit Economics: See Attached Spreadsheet,
"Barbados Calculations"
8. If at any time the circuit becomes a 100% WQN retail utilized circuit
the margin sharing will be 50% to each for the amount between cost and
the prevailing wholesale price for this termination location and 100%
to WQN between the Wholesale price and the retail price. The
termination charge may be adjusted from time to time as market
conditions require through mutual consent of the parties.
9. The parties agree that this circuit shall be sold to the customer
willing to pay the highest wholesale rate for the circuit. The
customer may be WQN.
/s/ Xxxx X. Xxxx /s/ Xxxxxxx Xxxxxx
---------------- ------------------
WorldQuest Networks iAxys
-26-
Schedule F
Guatemala
1. iAxys will route Guatemala traffic from wholesale customers through
iAxys' switch.
2. The minutes sold through this circuit will initially be sold at $0.14
(US) per minute -such rate may be adjusted from time to time by the
parties hereto as the wholesale market requires.
3. The parties shall pay the local termination partner $2,500 (US) per
month for termination which shall include local administration only so
long as the circuit is up and operational. The cost of local offices
and phone lines will be as reported to the JV by the local termination
partner. The termination charge may be adjusted from time to time as
market conditions require through mutual consent of the parties.
4. The parties shall pay satellite capacity of 256 kbps, at $4,000 per
month for the period of 1 year. The contract for said capacity shall
be in the name of iAxys.
5. parties hereto will split the remaining margin from the sale of
minutes 50% to WQN and 50% to iAxys.
6. WQN's initial capital investment is to be $117,400. iAxys' initial
capital investment is to be $117,400 according to the attached Budget
for capital expenses.
7. Example of Initial Circuit Economics: See Attached Spreadsheet,
"Guatemala Calculations"
8. If at any time the circuit becomes a 100% WQN retail utilized circuit
the margin sharing will be 50% to each for the amount between cost and
the prevailing wholesale price for this termination location and 100%
to WQN between the Wholesale price and the retail price. The
termination charge may be adjusted from time to time as market
conditions require through mutual consent of the parties.
9. The parties agree that this circuit shall be sold to the customer
willing to pay the highest wholesale rate for the circuit. The
customer may be WQN.
/s/ Xxxx X. Xxxx /s/ Xxxxxxx Xxxxxx
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WorldQuest Networks iAxys
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