EXHIBIT 10.10
JOINT VENTURE AGREEMENT
OF
WORLDQUEST/EVEREST JOINT VENTURE
(A Texas General Partnership)
THIS JOINT VENTURE AGREEMENT OF WORLDQUEST/EVEREST JOINT VENTURE
("Agreement") is made and entered into effective as of the 30th day of June,
2000, by and between WorldQuest Networks, Inc. ("WQN") and Everest Worldwide
Communications Inc., a Delaware corporation ("Everest") (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 WorldQuest/Everest Joint Venture, or such
other name as the Partners shall determine by majority vote 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.
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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 ten locations specified in Schedule I -Schedule X attached to
this Agreement and incorporated herein for all purposes by this reference
(the "Schedules"), pursuant to the terms and conditions of this Agreement.
(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 the Schedules for each location specified in
the Schedules (the "Sites") (subject to a variance of up to 10%, or $10,000, for
each Site, whichever is smaller, for which the Partnership will be responsible,
or such other costs which are agreed by both Partners to be the responsibility
of the Partnership), and subject to the limitations otherwise provided in this
Agreement, Everest shall be responsible for the following:
(a) Location of the Sites in the locations specified in the Schedules
and negotiation of agreements with terminating parties in each
location for review and approval in writing by WorldQuest prior
to execution of such agreement between the Partnership and such
terminating party;
(b) The installation of Internet or other voice terminating equipment
("Equipment") at the Sites;
(c) The 24 hour monitoring and maintenance of the Equipment located
outside the USA; Monitoring of USA based equipment shall transfer
to WQN as such equipment is connected to WQN switching equipment,
but until that time it is the responsibility of Everest;
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(d) Maintenance of a spare parts package in each country where a Site
is located of a size configuration mutually agreed upon by the
Partners;
(e) The marketing and sale of the Internet or other voice termination
service (the "Service"); and
(f) Administration and record keeping relative to the Equipment,
Sites and customers.
1.07 Additional Sites. The Partners may add Sites (by unanimous vote of
Voting Interests) 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. In the event of a deletion, the
Partnership shall honor the obligations of the Partnership to the Partnership's
local terminating party for local phone lines, Internet connections, rent and
the like for as long as those agreements are in force - but in no case longer
than 12 months. 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, including acts of God, war, insurrection,
governmental regulation or other reasons outside the Partnership's control, 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 unanimous 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
verify 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), circuits, equipment and termination costs; (b) actual
out-of-pocket (including travel 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; (e)
emergency technical support and cabling contractors; (f) billing fees by GenTel
for customers; and (g) wire transfer costs and other miscellaneous costs agreed
to by both Partners. Everest will be responsible for providing to WQN a monthly
operating budget and 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. Initially, Everest will be reimbursed for payments
to be made by it to the local terminating parties after provision of support and
background documentation to WQN, which will then cut checks to Everest in the
name of the Partnership. However, it is understood that it is the intent of the
Partners that the Partnership will, as soon as possible, take over this role of
Everest and will deliver checks and make payments to the local terminating
parties or their agent.
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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. Everest
shall have no right to establish, open or maintain any account for the deposit
of Partnership funds and shall promptly cause all Partnership funds 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 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.
1.11 Noncompetition/Noncircumvention. Each Partner agrees that it will not
during the existence of the Partnership enter into agreements to route or carry
traffic, otherwise than in the name of the Partnership, with any customer of the
other Partner that was an existing customer as of the effective date of this
Agreement and for whom such Partner was routing or carrying traffic over
telephone circuits or Internet voice termination equipment at any of the Sites.
At such time as it may become necessary for either Party to reveal the identity
of its terminating partners for the terminating locations covered by this
agreement, the parties hereto agree that such information is confidential and
shall be treated as such under the terms of this and any other confidentiality
agreement then in effect.
1.12 Traffic to be Carried at Highest Price. The Partners agree that at
such time that the Equipment at the Sites has reached capacity, if either
Partner can find a customer willing and able to pay a rate higher than the rate
being paid by any of the existing customers of the Partnership, the existing
customers paying a lower rate (commencing with the lowest rate) will be
terminated as soon as possible without violating the terms of the Partnership's
or Partner's agreement with such customer to provide the necessary capacity to
terminate traffic for the new customer paying the higher rate.
ARTICLE II
MANAGEMENT OF PARTNERSHIP
2.01 Management of Partnership.
(a) Everest is hereby appointed as the Project Manager (herein so
called) of the Partnership and is hereby invested with the power and
authority for, and responsibility of, managing, supervising and conducting
the routine, day-to-day business and affairs of the Partnership relating to
organization and establishment of local termination agreements with local
terminating parties in various countries, the ordering of local telephone
and Internet circuits, the placement of Equipment and the activation of
Service in each location, in each event, in accordance with and subject to
the provisions of this Agreement. Project Manager shall not receive a
salary as Project Manager. The routine, day-to-day business and affairs of
the Partnership for which Project Manager is responsible shall mean:
(1) preparing and delivering budgets (capital and operating),
check requests and back-up documentation to WQN for all Partnership
expenditures so that WQN can execute checks in payment thereof, other
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than those expenditures of the Partnership which WQN is responsible
for managing under the terms of this Agreement;
(2) providing WQN weekly CDR documentation for weekly xxxxxxxx
on or before the Friday following the week to which such xxxxxxxx
relate, until such time as the traffic is routed through WQN's switch,
at which time WQN shall be responsible for providing Everest weekly
CDR documentation or weekly xxxxxxxx on or before the Tuesday
following the week to which such xxxxxxxx relate;
(3) by the Tuesday of the following week, Everest will provide a
traffic information report to WQN for xxxxxxxx by the Partnership to
Everest for its traffic from the prior week 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 invested 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 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;
(3) timely performing its responsibilities in good faith and for
the benefit of the Partnership and in full compliance with all
applicable United States legal requirements; and
(4) paying invoices submitted by Everest by Friday of each week
if submitted by Everest to WQN by noon Tuesday of that same week.
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(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, 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. 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 Everest 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;
(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;
(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 under Section 2.01(a));
(11) assigning, transferring, pledging, compromising or releasing
any claim or debt owing to the Partnership;
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(12) assigning the right of the Partnership in specific
Partnership property; 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 and Everest, alternatively, 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 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.
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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) Everest agrees to contribute to the Partnership the cash,
equipment, costs incurred or to be incurred on the Partnership's behalf,
contracts, intangible rights, sweat equity and other properties and
benefits detailed on the Schedules (the "Everest Contributions"). The
Partners acknowledge and agree that as of the date of this Agreement,
various of the Everest Contributions shall be deemed to have already been
contributed to the Partnership, as detailed on the Schedules, and that
Everest shall be credited with an initial Capital Account (as defined in
Section 4.01) in the aggregate amount of those Everest Contributions deemed
to have been made as of the date of this Agreement, as detailed on the
Schedules. The Partners further acknowledge and agree that if there are
additional Everest Contributions that are required to be made by Everest,
and Everest hereby covenants and agrees to timely make such additional
Everest Contributions, as detailed on the Schedules. At the time each of
such additional Everest Contributions are made by Everest, Everest's
Capital Account shall be credited with an additional capital contribution
for such additional Everest Contributions in the amount agreed to by the
Partners as set forth on the Schedules. In return for the Everest
Contributions, Everest shall have a "Partnership Percentage" equal to 50%,
except with respect to the Sites set forth on Schedule I and II, with
respect to which Everest's Partnership Percentage shall be equal to 25%
until the portion of the WQN Contributions set forth on each of Schedules I
and Schedule II shall have been returned to WQN, at which time Everest's
Partnership Percentage shall equal 50% for these two Sites, as set forth on
Schedules I and II.
(b) WQN agrees to contribute to the Partnership the cash, equipment,
costs incurred or to be incurred on the Partnership's behalf, contracts,
intangible rights and other properties and benefits detailed on the
Schedules (the "WQN Contributions"). The Partners acknowledge and agree
that as of the date of this Agreement, various of the WQN Contributions
shall be deemed to have already been contributed to the Partnership, as
detailed on the Schedules, and that WQN shall be credited with an initial
Capital Account (as defined in Section 4.01) in the aggregate amount of
those WQN Contributions deemed to have been made as of the date of this
Agreement, as detailed on the Schedules. The Partners further acknowledge
and agree that there are additional WQN Contributions that are required to
be made by WQN, and WQN hereby covenants and agrees to timely make such
additional WQN Contributions, as detailed on the Schedules. At the time
each of such additional WQN Contributions are made by WQN, WQN's Capital
Account shall be credited with an additional capital contribution for such
additional WQN Contributions in the amount agreed to by the Partners as set
forth on the Schedules. In return for the WQN Contribution, WQN shall have
a "Partnership Percentage" equal to 50%, except with respect to the Sites
set forth on Schedules I and II, with respect to which WQN's Partnership
Percentage shall be equal to 75% until the portion of the WQN Contributions
set forth on each of Schedule I and Schedule II shall have been returned to
WQN, at which time WQN's Partnership Percentage shall equal 50% for these
two Sites, as set forth on Schedules I and II.
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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 (in excess of the Everest
Contributions and WQN 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 such 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 such
excess 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
excess capital contributions or loans. If the Partners unanimously approve
excess 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.
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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 WQN shall be equal to WQN's
initial WQN Contributions, as set forth in Section 3.01(b), and the Capital
Account of Everest shall be equal to Everest's initial Everest Contributions, as
set forth in Section 3.01(a), and the respective Capital Accounts of the
Partners (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. Reg ss.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, 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
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(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.
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 WQN and to Everest, the Net Cash Flow generated from the Sites
listed on the Schedules, as provided for in each Schedule, after which time
distributions shall be made thereafter in accordance with Section 5.03(b)
and (c); and
(b) 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
(c) To the Partners in accordance with their respective Partnership
Percentages any amounts of Net Cash Flow remaining after satisfaction of
the preceding priority items.
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
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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 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.
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(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 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(b)(1). 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 Everest ,
for approval by WQN and Everest, prior to thirty (30) days prior to the
filing date for any such return, and on approval thereof by WQN and
Everest, 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 expense of the Partnership for all
purposes of computing net income for federal income tax purposes.
(h) WQN shall be the "tax matters" partner.
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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, 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
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(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.
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 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
Everest Contribution or WQN Contribution, as applicable, or 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,
-15-
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 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 50% of the appraised fair market value of the Defaulting
Partner's Interest, and for purposes of determining such fair market
value, each Partner shall select an appraiser who is familiar with
businesses similar to the Partnership's business within twenty (20)
days after written demand by the Non-Defaulting Partner, and each of
such appraisers shall select a third
-16-
qualified appraiser who is familiar with businesses of this type
within twenty (20) days after expiration of the aforesaid initial
twenty (20) day period and such third appraiser shall appraise the
value of the Defaulting Partner's Interest which shall be the fair
market value for this purpose; provided, if the Defaulting Partner
does not timely appoint an appraiser, then the appraiser appointed by
the Non-Defaulting Partner shall appraise and set the fair market
value of the Defaulting Partner's Interest and no other appraisers
need be appointed;
(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 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
-17-
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.
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 THE
JURISTICTION OF TEXAS IN CLOSEST PROXIMITY TO THE DEFENDANT AND EACH PARTY
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS.
-18-
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.
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 forming and continuing the Partnership and
conducting its business, including, without limitation, legal and accounting
fees, costs of employees (if any), utilities, rent, costs of furniture,
fixtures, equipment and supplies, insurance premiums, taxes, advertising
expenses and office supplies. 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.
-19-
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.
10.12 Traffic Billed to Everest. Everest hereby agrees to pay the
Partnership within 15 days of the invoice date for the traffic billed by the
Partnership to Everest for the preceding week, as set forth in the reports
required to be delivered by Everest to WQN pursuant to Section 2.01(a)(3).
10.13 Option to Everest. WQN will grant Everest an option for 5,000 shares
of WQN common stock for each Site, up to a total of ten Sites, when the circuit
for such Site is installed and operating. Each option will be granted and shall
vest on the business day following the day that the circuit becomes operative
and the exercise price shall be the closing price of WQN's common stock on the
day of grant. The options will be exercisable on the third anniversary of the
date of grant; provided, however, for each month that a circuit operates
uninterrupted, the exercise date will be reduced by 6 months. Each option will
expire 37 months after the date of grant. "Uninterrupted" for purposes of this
Section 10.13 shall mean that the circuit carries an average of 200,000 minutes
per T.1 of capacity per month for six (6) months. Should the standard not be
met, then for each month it is not met it shall have no reducing effect on the
exercise date of the options.
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/ Xxxxxxx X. Xxxxxx
---------------------
Xxxxxx, Xxxxx 00000 Xxxxxxx X. Xxxxxx, President/Chief
Operating Officer
EVEREST WORLDWIDE COMMUNICATIONS INC.
0000 Xxxxxxxx Xxx. Xxxxx 000 By: /s/ Xxx Xxxxx
-------------
Xxxxxxx, Xxxxx 00000 Its: Xxx Xxxxx, CEO
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Schedule I
Bangalore, India #1
1. WorldQuest Networks will provide the Nuera Gateways, Channel Banks and
related equipment necessary for the termination location in Bangalore and
in the USA.
2. WorldQuest Networks will route Bangalore traffic from EWCI customers routed
through EWCI's switch then through WQN's switch for answer supervision. In
addition, WorldQuest Networks will then route the traffic through its Nuera
gateway to the WorldQuest Networks Bangalore gateway.
3. The minutes sold through this circuit will initially be sold at 28 cents
(US) per minute such rate may be adjusted from time to time by the parties
hereto as the wholesale market requires.
4. The parties shall pay the local termination partner 13 cents (US) per
minute for termination which shall cover the local office operation, the
cost of local phone lines and a local Internet connection of at least 128
Kb in capacity. The termination charge may be adjusted from time to time as
market conditions require through mutual consent of the parties.
5. EWCI shall receive 6 cents per minute commission for selling EWCI minutes
through this circuit and for maintaining the relationship with the local
partner. At such time as the EWCI switch is no longer necessary and a part
of the routing of traffic, the commission rate shall be reduced by 3 cents
to 3 cents per minute.
6. The parties hereto will split the remaining margin from the sale of minutes
75% to WQN and 25% to EWCI until such time as WQN has fully recovered its
capital investment - at that time the profit share shall be 50/50.
7. WQN's initial capital investment is to be $65,000. EWCI's initial capital
investment is approximately $50,000
8. Example of Initial Circuit Economics:
Sale Price 0.28 Per minute
Termination cost 0.13
Commission 0.06
75% 25%
---------
Margin 0.09 0.0675 0.0225
=========
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. In such a scenario there
will be no commissions (as defined above) paid to EWCI. 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.
__________________________ ________________________
WorldQuest Networks EWCI
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Schedule II
Jamaica #1
1. WorldQuest Networks will provide the Nuera Gateways, Channel Banks and
related equipment necessary for the termination location in Jamaica and in
the USA.
2. EWCI will provide the VSAT local equipment already in Jamaica and the
relocation of the satellite receiving equipment.
3. WorldQuest Networks will route Jamaica traffic from EWCI customers routed
through EWCI's switch then through WQN's switch for answer supervision. In
addition, WorldQuest Networks will then route the traffic through its Nuera
gateway to the WorldQuest Networks Jamaican Nuera gateway. WQN will work
with the frame relay provider ATC to reactivate the satellite link to EWCI
facility and the relocation of that local loop to WQN's facility at 00
Xxxxxx Xxxxxx. EWCI will pay any past due amounts due and owing to ATC.
4. The minutes sold through this circuit will initially be sold at 26 cents
(US) per minute such rate may be adjusted from time to time by the parties
hereto as the wholesale market requires.
5. The parties shall pay the local termination partner 10 cents (US) per
minute for termination, which shall cover the local office operation, the
cost of local phone lines. In addition. The parties hereto understand and
agree that the termination rate of 10 cents is based on a volume of minutes
of at least 300,000, should the volume drop below that number the parties
may be required by the terminating partner to cover the direct costs of
local rent and local phone lines until the volume requirement is reached.
That monthly amount is estimated to be $17,000.
6. EWCI shall receive 6 cents per minute commission for selling EWCI minutes
through this circuit and maintaining the relationship with the local
partner. At such time as the EWCI switch is no longer necessary and a part
of the routing of traffic, the commission rate shall be reduced by 3 cents
to 3 cents per minute.
7. The parties hereto will split the remaining margin from the sale of minutes
75% to WQN and 25% to EWCI until such time as WQN has fully recovered its
capital investment - at that time the profit share shall be 50/50.
8. WQN's initial capital investment is to be $65,000. EWCI's initial capital
investment is $50,000 plus the contribution of the VSAT down link equipment
(satellite dish, etc.)
9. Current Circuit Economics:
Sale Price 0.26 Per minute
Termination cost 0.10
Commission 0.06
Statellite $4,150 0.02 75% 25%
---------
Margin 0.08 0.06 0.02
=========
10. 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. In such a scenario there
will be no commissions (as defined above) paid to EWCI. The termination
charge may be adjusted from time to time as market conditions require
through mutual consent of the parties.
11. 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.
__________________________ ________________________
WorldQuest Xxxxxxxx XXXX
-00-
Xxxxxxxx XXX
Xxxxxxxxx, Xxxxx #2 (Existing)
1. WorldQuest Networks will purchase from EWCI the Nuera Gateways, Channel
Banks and related equipment necessary for the termination location in
Bangalore and in the USA.
2. WorldQuest Networks will route Bangalore traffic from EWCI customers routed
through EWCI's switch then through WQN's switch for answer supervision. In
addition, WorldQuest Networks will then route the traffic through its Nuera
gateway to the WorldQuest Networks Bangalore gateway. (This arrangement
will start upon the relocation of WQN's switch to it's permanent location
at 00 Xxxxxx Xx.)
3. The minutes sold through this circuit will be sold at 19 cents (US) per
minute such rate may be adjusted from time to time by the parties hereto as
the market requires. At such time as Item #2 above takes place the price
shall increase to 28 cents per minute.
4. The parties shall pay the local termination partner 13 cents (US) per
minute for termination which shall cover the local office operation, the
cost of local phone lines and a local Internet connection of at least 128
Kb in capacity.
5. EWCI shall receive 6 cents per minute commission for selling EWCI minutes
through this circuit and for maintaining the relationship with the local
partner. At such time as the EWCI switch is no longer necessary and a part
of the routing of traffic, the commission rate shall be reduced by 3 cents
to 3 cents per minute.
6. The parties hereto will split the remaining margin from the sale of minutes
50% to WQN and 50% to EWCI.
7. WQN's initial capital investment is to be $65,000 plus Nuera gateways
($35,000). EWCI's initial capital investment is approximately $61,000.
8. Current Circuit Economics:
Sale Price 0.28 Per minute
Termination cost 0.13
Commission 0.06
50% 50%
---------
Margin 0.09 0.045 0.045
=========
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. In such a scenario there
will be no commissions (as defined above) paid to EWCI. 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.
__________________________ ________________________
WorldQuest Xxxxxxxx XXXX
-00-
Xxxxxxxx XX
Xxxxxxxxxx, Xxxxxxxxxx (Existing)
1. WorldQuest Networks will purchase from EWCI the Nuera Gateways, Channel
Banks and related equipment necessary for the termination location in
Chittagong and in the USA.
2. WorldQuest Networks will route Chittagong traffic from EWCI customers
routed through EWCI's switch then through WQN's switch for answer
supervision. In addition, WorldQuest Networks will then route the traffic
through its Nuera gateway to the WorldQuest Networks Chittagong gateway.
(This arrangement will start upon the relocation of WQN's switch to its
permanent location at 00 Xxxxxx Xx.)
3. The minutes sold through this circuit will be sold at 23 cents (US) per
minute such rate may be adjusted from time to time by the parties hereto as
the market requires. At such time as Item #3 above takes place the price
shall increase to 28 cents per minute.
4. The parties shall pay the local termination partner 13 cents (US) per
minute for termination which shall cover the local office operation, the
cost of local phone lines and a local Internet connection of at least 128
Kb in capacity.
5. EWCI shall receive 6 cents per minute commission for selling EWCI minutes
through this circuit and for maintaining the relationship with the local
partner. At such time as the EWCI switch is no longer necessary and a part
of the routing of traffic, the commission rate shall be reduced by 3 cents
to 3 cents per minute.
6. The parties hereto will split the remaining margin from the sale of minutes
50% to WQN and 50% to EWCI until such time as WQN has fully recovered its
capital investment - at that time the profit share shall be 50/50.
7. WQN's initial capital investment is to be $65,000 plus Nuera gateways
($35,000) and related equipment. EWCI's initial capital investment is
approximately $54,000.
8. Current Circuit Economics:
Sale Price 0.23 Per minute
Termination cost 0.13
Commission 0.06
50% 50%
---------
Margin 0.04 0.02 0.02
=========
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. In such a scenario there
will be no commissions (as defined above) paid to EWCI. 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.
__________________________ ________________________
WorldQuest Xxxxxxxx XXXX
-00-
Xxxxxxxx X
Xxxxx, Xxxxxxxxxx (Existing)
1. WorldQuest Networks will purchase from EWCI the Nuera Gateways, Channel
Banks and related equipment necessary for the termination location in Dhaka
and in the USA.
2. WorldQuest Networks will route Dhaka traffic from EWCI customers routed
through EWCI's switch then through WQN's switch for answer supervision. In
addition, WorldQuest Networks will then route the traffic through its Nuera
gateway to the WorldQuest Networks Dhaka gateway. (This arrangement will
start upon the relocation of WQN's switch to its permanent location at 00
Xxxxxx Xx.)
3. The minutes sold through this circuit will be sold at 23 cents (US) per
minute such rate may be adjusted from time to time by the parties hereto as
the market requires. At such time as Item #3 above takes place the price
shall increase to 28 cents per minute.
4. The parties shall pay the local termination partner 13 cents (US) per
minute for termination which shall cover the local office operation, the
cost of local phone lines and a local Internet connection of at least 128
Kb in capacity.
5. EWCI shall receive 6 cents per minute commission for selling EWCI minutes
through this circuit and maintaining the relationship with the local
partner. At such time as the EWCI switch is no longer necessary and a part
of the routing of traffic, the commission rate shall be reduced by 3 cents
to 3 cents per minute.
6. The parties hereto will split the remaining margin from the sale of minutes
50% to WQN and 50% to EWCI until such time as WQN has fully recovered its
capital investment - at that time the profit share shall be 50/50.
7. WQN's initial capital investment is to be $100,000 plus Nuera gateways and
related equipment ($100,000). EWCI's initial capital investment is
approximately $62,000.
8. Current Circuit Economics:
Sale Price 0.23 Per minute
Termination cost 0.13
Commission 0.06
50% 50%
---------
Margin 0.04 0.02 0.02
=========
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. In such a scenario there
will be no commissions (as defined above) paid to EWCI. 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.
__________________________ ________________________
WorldQuest Xxxxxxxx XXXX
-00-
Xxxxxxxx XX
Xxxxx #0, Xxxxxxxxxx
0. WorldQuest Networks will provide the Nuera Gateways, Channel Banks and
related equipment necessary for the termination location in Dhaka and in
the USA.
2. WorldQuest Networks will route Dhaka traffic from EWCI customers routed
through EWCI's switch then through WQN's switch for answer supervision. In
addition, WorldQuest Networks will then route the traffic through its Nuera
gateway to the WorldQuest Networks Dhaka gateway. (This arrangement will
start upon the relocation of WQN's switch to its permanent location at 00
Xxxxxx Xx.)
3. The minutes sold through this circuit will be sold at 23 cents (US) per
minute such rate may be adjusted from time to time by the parties hereto as
the market requires. At such time as Item #3 above takes place the price
shall increase to 28 cents per minute.
4. The parties shall pay the local termination partner 13 cents (US) per
minute for termination which shall cover the local office operation, the
cost of local phone lines and a local Internet connection of at least 128
Kb in capacity.
5. EWCI shall receive 6 cents per minute commission for selling EWCI minutes
through this circuit and maintaining the relationship with the local
partner. At such time as the EWCI switch is no longer necessary and a part
of the routing of traffic, the commission rate shall be reduced by 3 cents
to 3 cents per minute.
6. The parties hereto will split the remaining margin from the sale of minutes
50% to WQN and 50% to EWCI.
7. WQN's initial capital investment is to be $75,000 plus Nuera gateways and
related equipment ($112,000). EWCI's initial capital investment is
approximately $75,000.
8. Current Circuit Economics:
Sale Price 0.23 Per minute
Termination cost 0.13
Commission 0.06
50% 50%
---------
Margin 0.04 0.02 0.02
=========
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. In such a scenario there
will be no commissions (as defined above) paid to EWCI. 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.
__________________________ ________________________
WorldQuest Xxxxxxxx XXXX
-00-
Xxxxxxxx XXX
Xxxxxxxxx, Xxxxx
0. WorldQuest Networks will provide the Nuera Gateways, Channel Banks and
related equipment necessary for the termination location in Hyderabad and
in the USA.
2. WorldQuest Networks will route Hyderabad traffic from EWCI customers routed
through EWCI's switch then through WQN's switch for answer supervision. In
addition, WorldQuest Networks will then route the traffic through its Nuera
gateway to the WorldQuest Networks Dhaka gateway. (This arrangement will
start upon the relocation of WQN's switch to its permanent location at 00
Xxxxxx Xx.)
3. The minutes sold through this circuit will be sold at 25 cents (US) per
minute such rate may be adjusted from time to time by the parties hereto as
the market requires. At such time as Item #3 above takes place the price
shall increase to 30 cents per minute.
4. The parties shall pay the local termination partner 13 cents (US) per
minute for termination which shall cover the local office operation, the
cost of local phone lines and a local Internet connection of at least 128
Kb in capacity.
5. EWCI shall receive 6 cents per minute commission for selling EWCI minutes
through this circuit and maintaining the relationship with the local
partner. At such time as the EWCI switch is no longer necessary and a part
of the routing of traffic, the commission rate shall be reduced by 3 cents
to 3 cents per minute.
6. The parties hereto will split the remaining margin from the sale of minutes
50% to WQN and 50% to EWCI.
7. WQN's initial capital investment is to be $50,000 plus Nuera gateways and
related equipment ($64,000). EWCI's initial capital investment is
approximately $50,000.
8. Current Circuit Economics:
Sale Price 0.25 Per minute
Termination cost 0.13
Commission 0.06
50% 50%
---------
Margin 0.06 0.03 0.03
=========
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. In such a scenario there
will be no commissions (as defined above) paid to EWCI. 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.
__________________________ ________________________
WorldQuest Xxxxxxxx XXXX
-00-
Xxxxxxxx XXXX
Xxxxxxx, Xxxxx
0. WorldQuest Networks will provide the Nuera Gateways, Channel Banks and
related equipment necessary for the termination location in Chennai and in
the USA.
2. WorldQuest Networks will route Chennai traffic from EWCI customers routed
through EWCI's switch then through WQN's switch for answer supervision. In
addition, WorldQuest Networks will then route the traffic through its Nuera
gateway to the WorldQuest Networks Dhaka gateway. (This arrangement will
start upon the relocation of WQN's switch to its permanent location at 00
Xxxxxx Xx.)
3. The minutes sold through this circuit will be sold at 25 cents (US) per
minute such rate may be adjusted from time to time by the parties hereto as
the market requires. At such time as Item #3 above takes place the price
shall increase to 30 cents per minute.
4. The parties shall pay the local termination partner 13 cents (US) per
minute for termination which shall cover the local office operation, the
cost of local phone lines and a local Internet connection of at least 128
Kb in capacity.
5. EWCI shall receive 6 cents per minute commission for selling EWCI minutes
through this circuit and maintaining the relationship with the local
partner. At such time as the EWCI switch is no longer necessary and a part
of the routing of traffic, the commission rate shall be reduced by 3 cents
to 3 cents per minute.
6. The parties hereto will split the remaining margin from the sale of minutes
50% to WQN and 50% to EWCI.
7. WQN's initial capital investment is to be $50,000 plus Nuera gateways and
related equipment ($62,000). EWCI's initial capital investment is
approximately $50,000.
8. Current Circuit Economics:
Sale Price 0.25 Per minute
Termination cost 0.13
Commission 0.06
50% 50%
---------
Margin 0.06 0.03 0.03
=========
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. In such a scenario there
will be no commissions (as defined above) paid to EWCI. 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.
__________________________ ________________________
WorldQuest Xxxxxxxx XXXX
-00-
Xxxxxxxx XX
Xxxxxx, Xxxxx
0. WorldQuest Networks will provide the Nuera Gateways, Channel Banks and
related equipment necessary for the termination location in Mumbai and in
the USA.
2. WorldQuest Networks will route Mumbai traffic from EWCI customers routed
through EWCI's switch then through WQN's switch for answer supervision. In
addition, WorldQuest Networks will then route the traffic through its Nuera
gateway to the WorldQuest Networks Dhaka gateway. (This arrangement will
start upon the relocation of WQN's switch to its permanent location at 00
Xxxxxx Xx.)
3. The minutes sold through this circuit will be sold at 22 cents (US) per
minute such rate may be adjusted from time to time by the parties hereto as
the market requires. At such time as Item #3 above takes place the price
shall increase to 28 cents per minute.
4. The parties shall pay the local termination partner 13 cents (US) per
minute for termination which shall cover the local office operation, the
cost of local phone lines and a local Internet connection of at least 128
Kb in capacity.
5. EWCI shall receive 6 cents per minute commission for selling EWCI minutes
through this circuit and maintaining the relationship with the local
partner. At such time as the EWCI switch is no longer necessary and a part
of the routing of traffic, the commission rate shall be reduced by 3 cents
to 3 cents per minute.
6. The parties hereto will split the remaining margin from the sale of minutes
50% to WQN and 50% to EWCI.
7. WQN's initial capital investment is to be $50,000 plus Nuera gateways and
related equipment ($65,000). EWCI's initial capital investment is
approximately $50,000.
8. Current Circuit Economics:
Sale Price 0.22 Per minute
Termination cost 0.13
Commission 0.06
50% 50%
---------
Margin 0.03 0.015 0.015
=========
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. In such a scenario there
will be no commissions (as defined above) paid to EWCI. 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.
__________________________ ________________________
WorldQuest Xxxxxxxx XXXX
-00-
Xxxxxxxx X
Xxxxx, Xxxxxx Xxxx Xxxxxxxx
1. WorldQuest Networks will provide the Nuera Gateways, Channel Banks and
related equipment necessary for the termination location in Dubai and in
the USA.
2. WorldQuest Networks will route Dubai traffic from EWCI customers routed
through EWCI's switch then through WQN's switch for answer supervision. In
addition, WorldQuest Networks will then route the traffic through its Nuera
gateway to the WorldQuest Networks Dhaka gateway. (This arrangement will
start upon the relocation of WQN's switch to its permanent location at 00
Xxxxxx Xx.)
3. The minutes sold through this circuit will be sold at 14 cents (US) per
minute such rate may be adjusted from time to time by the parties hereto as
the market requires. At such time as Item #3 above takes place the price
shall increase to 35 cents per minute.
4. The parties shall pay the local termination partner 13 cents (US) per
minute for termination which shall cover the local office operation, the
cost of local phone lines and a local Internet connection of at least 128
Kb in capacity.
5. EWCI shall receive 3 cents per minute commission for selling EWCI minutes
through this circuit and maintaining the relationship with the local
partner. At such time as the EWCI switch is no longer necessary and a part
of the routing of traffic, the commission rate shall be reduced by 3 cents
to 0 cents per minute.
6. The parties hereto will split the remaining margin from the sale of minutes
50% to WQN and 50% to EWCI.
7. WQN's initial capital investment is to be $50,000 plus Nuera gateways and
related equipment ($65,000). EWCI's initial capital investment is
approximately $50,000.
8. Current Circuit Economics:
Sale Price 0.14 Per minute
Termination cost 0.08
Commission 0.03
50% 50%
---------
Margin 0.02 0.01 0.01
=========
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. In such a scenario there
will be no commissions (as defined above) paid to EWCI. 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.
__________________________ ________________________
WorldQuest Networks EWCI
-30-
