FORMATION AGREEMENT (FRANCE)

EXHIBIT 10.12





URSUS TELECOM FRANCE



Protocol of Agreement

of November 20, 1997

PROTOCOL OF AGREEMENT



Between the undersigned:



Ursus Telecom Corporation, a company subject to the laws of the State of Florida (United States), headquartered at 440 Sawgrass Corporate Pkwy, Suite 112, Sunrise, FL 33325 USA, and represented by Mr. Luca Giussani,



hereinafter referred to as "Ursus Telecom Corporation,"



As party of the first part,



And,



Central Call International, a limited liability company with capital in the amount of 50,000 francs, headquartered at 110, rue de Longchamp in Paris (75116), registered in the Register of Commerce and Companies of Paris under the number B 395 189 061, and represented by its manager, Mr. Guillaume de Beaurepaire,



hereinafter referred to as "Central Call,"



As party of the second part,



And,



Mondial Telecom, a limited liability company with capital in the amount of 55,000 francs, headquartered at 34, boulevard Exelmans in Paris (75016), in the process of being assigned a registration number in the Register of Commerce and Companies of Paris following the transfer of the headquarters from Papeete to Paris, and represented by its manager, Mr. Paul-Henry Derly,



hereinafter referred to as "Mondial Telecom,"



As party of the third part.



It being stipulated that "Party" signifies any one of the Parties to the present protocol of agreement and that "Parties" refers indiscriminately to all the Parties to the present protocol of agreement.



IT HAS PREVIOUSLY BEEN ESTABLISHED:



(A) Ursus Telecom Corporation, Central Call and Mondial Telecom each carry out

an activity related to the supply and marketing of telecommunications

services open to competition.



(B) Ursus Telecom Corporation, Central Call and Mondial Telecom have indicated

the desire to combine the experience they have acquired separately and to

establish a partnership that shall allow them to enhance and exploit their

complementarity to the greatest extent possible.



(C) The partnership between Ursus Telecom Corporation, Central Call and Mondial

Telecom shall take the form of a capitalistic alliance within Ursus Telecom

France, a limited liability company with capital in the amount of 50,000

francs, headquartered at 110, rue de Longchamp in Paris (75116), registered

in the Register of Commerce and Companies of Paris under the number B 413

441 395, and whose articles of incorporation appear in Attachment 1 hereto,

it being clarified that to date, Ursus Telecom







Corporation owns almost all the shares of capital stock (hereinafter "Ursus

Telecom France").



Consequently, Ursus Telecom Corporation, Central Call and Mondial Telecom

have agreed to enter into the present protocol of agreement that sets forth

the basic principles and terms of the partnership they have decided to

establish for the operation and development of Ursus Telecom France

(hereinafter the "Protocol"), with the stipulation that certain provisions

of the Protocol shall be reviewed, detailed and finalized in definitive

agreements that shall be entered into by the Parties or by the Parties and

Ursus Telecom France.



THIS HAVING BEEN ESTABLISHED, IT HAS BEEN AGREED AS FOLLOWS:



Article 1 - Activities of Ursus Telecom France



1.1 Operation of Ursus Telecom France



Ursus Telecom France has and shall have as activity (i) the installation

and operation on French territory of telecommunications equipment set up or

used to supply the public with telecommunications services (ii) the supply

and marketing of all telecommunications services open to competition and

free enterprise, and (iii), subject to procurement of the authorizations

required by the French Postal and Telecommunications Code, the supply and

marketing of telecommunications services subject to prior government



The Parties agree that the partnership that they have decided to establish

among themselves requires that operation of Ursus Telecom France begin as

soon as possible and no later than January 1, 1998, it being stipulated

that if, on this date, operation of Ursus Telecom France has not begun,

more particularly for reasons associated with the installation of the

technical equipment described in section 1.2 hereinafter, the Parties shall

meet to determine together and in good faith, a new date that, in any

event, may not result in extending the term of the Protocol as such is

stipulated in article 6 hereinafter.



1.2 Obligations of Ursus Telecom Corporation



Ursus Telecom Corporation binds itself to make available to Ursus Telecom

France, under the conditions and in accordance with the terms to be

stipulated in a definitive agreement between Ursus Telecom Corporation and

Ursus Telecom France, all the technical equipment, and primarily a switch

described in Attachment 2 to this protocol, that shall be indispensable to

the operation of Ursus Telecom France, the list whereof shall be

established in the aforementioned definitive agreement.



Ursus Telecom Corporation agrees to make the technical equipment mentioned

in the preceding paragraph available to Ursus Telecom France within a

sufficient time period so as to allow the start-up of operation of Ursus

Telecom France under the conditions described in section 1.1 above.



Ursus Telecom Corporation agrees to insure that the technical equipment

that it shall make available to Ursus Telecom France pursuant to the

present section complies with the legal and regulatory provisions in force

in France.



1.3 Relations between Ursus Telecom Corporation and Ursus Telecom France



Concomitant with the availability of the technical equipment as set forth

by the provisions of section 1.2 above, Ursus Telecom Corporation shall

enter into an agreement according to which Ursus Telecom







Corporation owns almost all the shares of capital stock (hereinafter "Ursus

Telecom France").



Consequently, Ursus Telecom Corporation, Central Call and Mondial Telecom

have agreed to enter into the present protocol of agreement that sets forth

the basic principles and terms of the partnership they have decided to

establish for the operation and development of Ursus Telecom France

(hereinafter the "Protocol"), with the stipulation that certain provisions

of the Protocol shall be reviewed, detailed and finalized in definitive

agreements that shall be entered into by the Parties or by the Parties and

Ursus Telecom France.



THIS HAVING BEEN ESTABLISHED, IT HAS BEEN AGREED AS FOLLOWS:



Article 1 - Activities of Ursus Telecom France



1.1 Operation of Ursus Telecom France



Ursus Telecom France has and shall have as activity (i) the installation

and operation on French territory of telecommunications equipment set up or

used to supply the public with telecommunications services (ii) the supply

and marketing of all telecommunications services open to competition and

free enterprise, and (iii), subject to procurement of the authorizations

required by the French Postal and Telecommunications Code, the supply and

marketing of telecommunications services subject to prior government



The Parties agree that the partnership that they have decided to establish

among themselves requires that operation of Ursus Telecom France begin as

soon as possible and no later than January 1, 1998, it being stipulated

that if, on this date, operation of Ursus Telecom France has not begun,

more particularly for reasons associated with the installation of the

technical equipment described in section 1.2 hereinafter, the Parties shall

meet to determine together and in good faith, a new date that, in any

event, may not result in extending the term of the Protocol as such is

stipulated in article 6 hereinafter.



1.2 Obligations of Ursus Telecom Corporation



Ursus Telecom Corporation binds itself to make available to Ursus Telecom

France, under the conditions and in accordance with the terms to be

stipulated in a definitive agreement between Ursus Telecom Corporation and

Ursus Telecom France, all the technical equipment, and primarily a switch

described in Attachment 2 to this protocol, that shall be indispensable to

the operation of Ursus Telecom France, the list whereof shall be

established in the aforementioned definitive agreement.



Ursus Telecom Corporation agrees to make the technical equipment mentioned

in the preceding paragraph available to Ursus Telecom France within a

sufficient time period so as to allow the start-up of operation of Ursus

Telecom France under the conditions described in section 1.1 above.



Ursus Telecom Corporation agrees to insure that the technical equipment

that it shall make available to Ursus Telecom France pursuant to the

present section complies with the legal and regulatory provisions in force

in France.



1.3 Relations between Ursus Telecom Corporation and Ursus Telecom France



Concomitant with the availability of the technical equipment as set forth

by the provisions of section 1.2 above, Ursus Telecom Corporation shall

enter into an agreement according to which Ursus Telecom







Corporation shall be responsible for the ordinary maintenance of said

equipment, nor including the supply of spare parts, for a renewable minimum

period of five (5) years, and shall supply Ursus Telecom France with

technical assistance during its use. It shall expressly be agreed, and

Central Call and Mondial Telecom hereby accept, that Ursus Telecom

Corporation shall collect an annual fixed compensation of sixty thousand

dollars US (60,000 $) in exchange for the services that it shall perform

under the aforementioned agreement, it being stipulated that this annual

fixed compensation paid by Ursus Telecom France shall be revised each year

in accordance with the terms that shall be stipulated in the agreement to

be signed by Ursus Telecom Corporation and Ursus Telecom France.



More generally, Ursus Telecom Corporation shall sign any agreements

necessary for the operation and development of Ursus Telecom France.



1.4 Obligations of Central Call and of Mondial Telecom



Central Call and Mondial Telecom agree to transfer to Ursus Telecom France,

under the conditions and in accordance with the terms that shall be set

forth in the definitive agreements signed by Central Call and Ursus Telecom

France, on the one hand, and by Mondial Telecom and Ursus Telecom France on

the other, all of their respective customers and the related files

connected with the supply and marketing in France of the telecommunications

services defined in section 1.1 above, as such customers shall be

described, with respect to Central Call and Mondial Telecom respectively,

in Attachment 3 and in Attachment 4 of this protocol of agreement.



Central Call and Mondial Telecom agree to pay Ursus Telecom Corporation any

amounts they may owe Ursus Telecom Corporation, as needed, no later than

the date set by the Parties in section 1.1 above.



Central Call and Mondial Telecom, as well as Mr. Guillaume de Beaurepaire

and Mr. Paul-Henry Derly, these latter acting on their own behalf, bind

themselves with respect to Ursus Telecom Corporation as of the signing of

the Protocol, to establish the partnership covered by the Protocol as

exclusive, and, as a consequence, not to conduct any discussions or

negotiations, either by themselves or through their respective counsels,

for the purpose of entering into any agreements of any kind with any third

parties involving similar or related activities to those carried out by

Ursus Telecom France.



Central Call and Mondial Telecom, as well as Mr. Guillaume de Beaurepaire

and Mr. Paul-Henry Derly, these latter acting on their own behalf, agree

with respect to Ursus Telecom Corporation as of the date this Protocol

shall be signed, not to carry out, directly or indirectly, in any manner

whatsoever, any activity likely to compete with the activities of Ursus

Telecom France, not to have any interest in or participate in any

investment, directly or indirectly, in any business likely to compete with

Ursus Telecom France for as long as Central Call and Mondial Telecom shall

be shareholders in Ursus Telecom France, pursuant to the provisions of

article 2 hereinafter and for a period of three (3) years after they have

ceased to be shareholders in Ursus Telecom France.



As a consequence of the provisions of the second and third paragraphs

above, Central Call and Mondial Telecom, as well as Mr. Guillaume de

Beaurepaire and Mr. Paul-Henry Derly, these latter acting on their own

behalf, agree to offer first and as a priority to Ursus Telecom Corporation

and to Ursus Telecom France all projects involving activities similar or

related to those carried out by Ursus Telecom France, it being stipulated

that they may only be involved, directly or indirectly, in such activities

if the projects presented were previously rejected by Ursus Telecom

Corporation and by Ursus







Telecom France within the framework of the provisions of article 3, section

3.2 (f) hereinafter.



Article 2 - Entry of Central Call and Mondial Telecom into the capital of Ursus Telecom France



2.1 Increase of the capital stock of Ursus Telecom France



The Parties agree that the partnership that they decided to set up between

themselves involves the entry of Central Call and of Mondial Telecom into

the capital of Ursus Telecom France, that shall take the form of a capital

increase whereupon the holding of each of the Parties in the capital of

Ursus Telecom France shall be as follows:



- Ursus Telecom Corporation: fifty percent (50 %) plus two (2) shares of

capital stock;



- Central Call: twenty-five percent (25 %) less one (1)

share of capital stock;



- Mondial Telecom: twenty-five percent (25 %) less one (1)

share of capital stock.



These holdings were determined by the Parties in exchange for the

conventional appraisal of the contributions that each of them shall make to

Ursus Telecom France, under the conditions and in accordance with the terms

that the Parties shall set forth as soon as possible and no later than the

date set in article 2, section 2.2 above, as such contributions are defined

in article 1 above.



The increase of the capital stock of Ursus Telecom France, a part whereof,

or, if necessary, all thereof shall be reserved for Central Call and

Mondial Telecom, shall be accomplished through in-kind contributions or by

cash contributions.



Ursus Telecom Corporation shall insure that the manager of Ursus Telecom

France calls a general meeting of shareholders of Ursus Telecom France for

the purpose of voting on the capital increase described in the present

section no later than the date set by the Parties for the start of

operations of Ursus Telecom France, pursuant to the provisions of article

1, section 11 above.



Ursus Telecom Corporation binds itself with respect to Central Call and

Mondial Telecom, subject to the signing of a shareholders' agreement by the

Parties, as set forth by the provisions of article 5 hereinafter, to ratify

all the resolutions that shall appear on the agenda of the aforementioned

general meeting of shareholders relating to the increase in Ursus Telecom

France capital stock.



Central Call, Mondial Telecom and, as needed, Ursus Telecom Corporation

agree to subscribe all the new shares of capital stock that shall be issued

for their benefit at the time of the increase of Ursus Telecom France

capital, and to pay them up in full through in-kind and/or cash payments or

by compensation with sure, liquid and payable debts that they hold, should

the case arise, on Ursus Telecom France.



2.2 Effective date of the entry of Central Call and Mondial Telecom into the

capital of Ursus Telecom France



The entry of Central Call and Mondial Telecom into the capital of Ursus

Telecom France must take place no later than January 1, 1998, it being

stipulated that if, on this date, the increase in the capital







stock of Ursus Telecom France has not been completed, the Parties shall

meet to determine a new date that, in any event, may not result in

extending the term of the Protocol, as such is stipulated in article 6



2.3 Administration of Ursus Telecom France prior to the entry of Central Call

and Mondial Telecom into the capital of Ursus Telecom France



The Parties agree, and Ursus Telecom Corporation shall insure with respect

to Central Call and Mondial Telecom, that during the period between the

date the Protocol shall be signed and the date of entry of Central Call and

Mondial Telecom into the capital of Ursus Telecom France, Ursus Telecom

France shall conduct its activities, insofar as possible, with customary

and due diligence.



Additionally, Ursus Telecom Corporation guarantees Central Call and Mondial

Telecom that no significant strategic, financial, technical or commercial

decisions may be made during the period described in the preceding

paragraph without the prior cooperation of the Parties.



Article 3 - Functioning of Ursus Telecom France



3.1 Management of Ursus Telecom France



The Parties agree that as of the entry of Central Call and Mondial Telecom

into the capital of Ursus Telecom France under the conditions set forth by

the provisions of article 2 above, Ursus Telecom France shall be managed by

two co-managers who shall each have the same powers and who shall be

appointed by the general meeting of shareholders of Ursus Telecom France at

the proposal of Central Call and Mondial Telecom.



Ursus Telecom Corporation agrees to vote in favor of appointing the two

individuals, one proposed by Central Call and the other by Mondial Telecom,

as co-managers of Ursus Telecom France, it being stipulated that the first

two (2) co-managers shall be Mr. Guillaume de Beaurepaire and Mr.

Paul-Henry Derly.



3.2 Ursus Telecom France management decisions



The Parties expressly agree that the powers of the co-managers shall be

limited by the articles of incorporation, and that they must receive the

prior authorization of the shareholder or shareholders, voting under the

conditions set forth by the articles of incorporation and representing the

majority of capital stock shares, for all of the following decisions:



(a) establishment of a subsidiary, opening of a secondary establishment or

of an agency, acquisition of a business, acquisition or subscription

of shares or of capital stock in another company and, more generally,

any acquisition of holdings, direct or indirect, in any legal entity

regardless of the type thereof;



(b) sale of a strategic asset of Ursus Telecom France, it being specified

that this term designates in a general manner any asset necessary for

the operation of Ursus Telecom France or that plays a significant part

in the valorization thereof;



(c) signing of any contract and/or modification of any contractual

relation, including the termination of any contract between Ursus

Telecom France and a co-manager or shareholder or a company in which a

co-manager or a shareholder is directly or indirectly involved;







(d) commitment of Ursus Telecom France in projects involving the supply

and sale of telecommunications services subject to prior government

approval;



(e) commitment of Ursus Telecom France in projects that involve the

performance of activities other than those described in article 1

above;



(f) strategic decision or commitment of Ursus Telecom France in projects

that involve investments in excess of one hundred fifty thousand

francs (150,000 Frf);



(g) adoption of the annual budget and of the business plan provided for in

article 3, section 3.3 hereinafter;



(h) securities, endorsements, guarantees given or received by Ursus

Telecom France on its behalf or on behalf of third parties;



(i) endorsement of any loan in an amount greater than fifty thousand

francs (50,000 Frf.);



(j) granting by Ursus Telecom France of a loan or advance to a third

party;



(k) pledge of security collateral, mortgage or the granting of any other

security of any kind whatsoever involving the assets of Ursus Telecom



The Parties expressly agree that the provisions of the present section

shall be integrated into the articles of incorporation of Ursus Telecom

France no later than at the time of the general meeting of shareholders

that must vote on the capital increase described in article 2, section 2.1



3.3 Administration and financing of Ursus Telecom France



The Parties agree that Ursus Telecom France shall be managed on the basis

of an annual budget that shall be presented by the two (2) co-managers and

adopted in accordance with the conditions set forth by the provisions of

section 3.2 (g) above. The annual budget must, in particular, specify the

mode of functioning of Ursus Telecom France.



Additionally, the activities of Ursus Telecom France shall be developed in

accordance with a business plan prepared by the Parties at the start of

each fiscal period and revised on a regular basis.



Article 4 - Provisions pertaining to the sale and assignment of capital stock shares



4.1 Right of pre-emption



Without prejudice to the enforcement of the provisions of the articles of

incorporation of Ursus Telecom France pertaining to the approval of new

shareholders, and excepting sales of capital stock shares that took place

pursuant to the provisions of section 4.3 hereinafter, any sale of shares

of capital stock contemplated by any of the Parties shall initiate the

right of pre-emption of the other Parties in proportion to the percentage

of shares that they own without taking into consideration the shares of the

Party who is contemplating selling.



The right of pre-emption must be exercised for all the shares offered for

sale by the Party wishing to sell and under the same conditions,

particularly as regards price, as those set forth for the sale initially

planned by said Party.







4.2 Promise to sell shares of capital stock



Without prejudice to the enforcement of the provisions of the articles of

incorporation of Ursus Telecom France pertaining to the approval of new

shareholders and of those resulting from section 4.3 hereinafter, in the

event the major shareholder plans to sell all his shares of capital stock

to one or more third parties, Central Call and Mondial Telecom irrevocably

bind themselves, unless they exercise their right of preemption as

stipulated in section 4.1 above, to sell to the major shareholder or to the

third-party assignee(s) all the shares they own in the capital stock of

Ursus Telecom France, if the major shareholder and/or the third-party

assignee indicate their desire, under the same conditions, particularly as

regards price, as those set forth for the sale initially planned by the

major shareholder.



4.3 Purchase by Ursus Telecom Corporation of the shares owned by Central Call

and Mondial Telecom



In the event Ursus Telecom Corporation is offered on a regulated market or

stock exchange in the United States, Ursus Telecom Corporation agrees to

purchase all the shares of stock owned by Central Call and Mondial Telecom

in the capital of Ursus Telecom France, if these latter companies so

request, under the conditions and in accordance with the terms that shall

be set forth in a definitive agreement signed by the Parties no later than

at the time of the general meeting of shareholders called to vote on the

capital increase described in article 2, section 2.1 above.



The Parties her ...