Joint Venture Agreement Dated January, 1996

EXHIBIT 10.14


JOINT VENTURE AGREEMENT


THIS JOINT VENTURE AGREEMENT (as modified or amended from time to time, this "Agreement") is made this ____ day of January, 1996, by and between Henk J. Keilman and Jan Peter Kastelein (each individually a "JV Partner" and collectively the "JV Partners"), and MTC Telemanagement Corporation, a California corporation with offices in Petaluma, California, USA ("MTC") (the JV Partners and MTC collectively referred to hereinafter as the "Parties"), with reference to the following facts:


A. MTC is in the business of developing, producing, and distributing unique, technology-based telecommunications products and services;


B. The JV Partners are principals in Atlantic Telecom B.V., a Dutch corporation ("ATC"), which is engaged in the marketing, sales and installation of telecommunications products and services; and


C. The Parties, desiring to establish a joint venture company under the laws of the Netherlands in order to actively market and sell such products and services in the Territory (defined below), entered into a Memorandum of Understanding, dated as of November 22, 1995, which set forth the general agreements of the Parties with respect to the joint venture.


D. The Parties now have agreed to establish such joint venture company under the terms and conditions set forth below.


NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, MTC and the JV Partners hereby agree as follows:


I. DEFINITIONS


A. Defined Terms. The following definitions shall apply to this
------------- Agreement:


"Affiliate Support Services" shall mean those services provided by the Corporation to any Master Affiliate Licensee or Sub-Affiliate, including, without limitation, services in connection with customer support, promotion, public relations, advertising, ESA support services, and billing services.


"Agent" shall mean any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.


"Authorized Signatory" shall have the meaning set forth in Section V.D.1 hereof.


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"Business Plan" shall mean the comprehensive business plan for the Corporation covering a period of at least three (3) years, a copy of which is attached hereto as Exhibit C.


"Commercial Code" shall mean the laws of the Netherlands but only insofar as they relate to the organization and internal management of a corporation in the Netherlands.


"Common Stock" shall have the meaning set forth in Section II.B. hereof.


"Corporation" shall have the meaning set forth in Section II.A. hereof.


"Disclosing Party" shall mean the Party furnishing Proprietary Information to any other Party.


"Effective Date" shall mean the later of (i) the date first written above or (ii) the date on which this Agreement is executed by each Joint Venture Partner, the Chief Executive Officer of MTC and a Senior Vice President of MTC.


"ESA" shall mean MTC's Extended System Access computer system.


"Events of Default" shall have the meaning set forth in Section X.C. hereof.


"Existing Affiliate" shall mean any Master Affiliate Licensee or Sub- Affiliate existing as of the date of this Agreement.


"Existing Sales" shall have the meaning set forth in Section III.F.2. hereof.


"JV Partner" shall have the meaning set forth in the preamble hereof.


"Letters of Credit" shall mean the letters of credit issued for the benefit of MTC pursuant to Section II.E. hereof.


"Majority Shareholders" shall mean, with respect to each class of Stock, the Shareholders holding more than fifty percent (50%) of such class of Stock.


"Master Affiliate Licensees" shall mean the network of independent contractors located in the United States of America and around the world which enter into agreements with MTC and/or the Corporation to promote and market MTC Services.


"MTC Customers" shall mean any customer of MTC, but shall specifically exclude any Subscribers.


"MTC Services" shall mean MTC's Communication Management Services offered by MTC to the Corporation from time to time, including, but not limited TO, incoming and outgoing international long distance telephone service, client services such as, but not limited to, billing sorts, formats,


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master billing arrangements, and carrier services provided by MTC through OCCs, as the foregoing may be modified from time to time, and related Products.


"New Affiliates" shall mean those entities which first become Master Affiliate Licensees or any Sub-Affiliate thereof following the Effective Date of this Agreement.


"New Affiliate License Agreement" shall have the meaning set forth in Section III.C. hereof.


"OCC" shall mean other common carriers.


"Party" shall mean either MTC or any JV Partner.


"Products" shall mean communication products offered by MTC to the MTC Customers and/or Subscribers.


"Proprietary Information" shall mean: (i) this Agreement and any amendment hereto; (ii) any and all technical information of the Disclosing Party including, without limitation, product data, methods of manufacture, technical processes, designs and design systems, inventions and research programs, trade "know-how", software, algorithms, computer processing systems, object and source codes, user manuals, systems documentation, secret processes, know-how, receipts, formulas, training material and technical data, any other similar information; (iii) any and all business information of or relating to the Disclosing Party that is not known to the general public including, without limitation, personnel information, employment records and policies, rates and rate tables, compensation schedules, pricing policies, credit and collections policies, operational methods, marketing plans and strategies, product development techniques or plans, new personnel acquisition plans, contract terms and conditions, affiliate lists and customer lists; (iv) any information disclosed to the Disclosing Party by a third party and designated as confidential; and (v) any other information designated as confidential by the Disclosing Party. Notwithstanding the foregoing, Proprietary Information shall not include information which: (a) has been published or otherwise come into the public domain through no fault of the Parties; (b) prior to disclosure is properly within the legitimate possession of the Receiving Party without obligation of confidentiality; (c) subsequent to disclosure is lawfully received from a third party having rights therein without restriction of the third party's right to disseminate such information and without notice of any restriction against its farther disclosure; (d) is independently developed without breach of any obligation of confidentiality through parties who have not had direct or indirect access to or knowledge of such Proprietary Information; or (e) is transmitted to the Receiving Party after the Disclosing Party has received written notice from the Receiving Party that it does not desire to receive further Proprietary Information.


"Receiving Party" shall mean any Party receiving Proprietary Information from the Disclosing Party.


"Sales Revenue" shall mean MTC billed revenue that is eligible for commission as determined by MTC.


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"Secondary Joint Venture" shall have the meaning set forth in Section III.C. hereof.


"Secondary Joint Venture Agreement" shall mean, with respect to any Secondary Joint Venture established pursuant to the terms hereof, the joint venture agreement between MTC, the Corporation, and the Third Party.


"Shareholders" shall mean each JV Partner and MTC and their permitted successors and assigns.


"Stock" shall mean any capital stock issued by the Corporation as contemplated herein.


"Sub-Affiliates" shall mean those independent contractor organizations which contract with Master Affiliate Licensees to promote and market MTC Services.


"Subscribers" shall mean customers who are billed directly by the Corporation.


"Territory" shall mean Belgium, the Netherlands, Luxembourg, France and Germany.


"Third Party" shall mean any entity within the Territory that (a) occupies strategic positions and has substantial market share in the telecommunication industry in the Territory, (b) has significant abilities to market, sell and distribute the Services, (c) whose business is compatible with MTC's business and global strategy, and (d) is willing to make substantial investments, including a minimum of initial capital contribution of no less than U.S.$l,000,000.


B. Section References. As used in this Agreement, the words
------------------ "hereof," "herein" and "hereunder," and words of similar import shall refer to this Agreement as a whole, and not to any particular provision of this Agreement, and the words "Article", "Section", "Exhibit" and "Addendum" are to this Agreement unless otherwise specified.


II. ORGANIZATION OF THE CORPORATION


A. General. Prior to the Effective Date, the JV Partners
------- established a new company organized as a public limited liability company under the Commercial Code of the Netherlands. The new company currently is known as MTC Telecom Western Europe B.V.I.O. and upon proper qualification under the laws of the Netherlands shall be known as MTC Telecom Western Europe B.V. (hereinafter, the "Corporation"). The charter documents required for the formation of the Corporation shall be printed in both the Dutch and English languages (copies of which are attached hereto as Exhibit A.) The JV Partners shall prepare any and all documents as shall be required for the incorporation of the Corporation, and MTC and the JV Partners shall, in conformity with the JV Partners' instructions, promptly execute or cause to be executed any such document as may be required in connection therewith.


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Furthermore the Parties recognize that due to legal or tax considerations, or considerations related to Dutch Company law, some aspects of the Joint Venture Agreement may have to be amended after the Agreement has been executed. Such amendments will be agreed upon by the Parties on a case by case basis, and will be guided by the legal and tax requirements as advised by an external, qualified consultant.


B. Authorized Capital. The Corporation shall have the authority to
------------------ issue ___________________ (_______) shares of non-bearer common stock issuable by the Corporation ("Common Stock"). The Common Stock shall have a par value of one Dutch guilder per share. The Corporation's stock may be held by the Parties directly or indirectly through an affiliated legal entity controlled by such Party.


C. Contributions by the Parties. The Parties shall make capital
---------------------------- contributions or loans to the Corporation in the following amounts:


1. MTC will contribute a total amount in cash of U.S.
$[ * ], of which U.S. $[ * ], will be contributed in the form of share
capital, and U.S. $[ * ] will be contributed in the form of [ * ]. The
total amount of U.S. $[ * ] will be paid in twelve equal monthly
installments of U.S. $[ * ] each, of which the first installment was
made on or around _________________ , 1996. In addition MTC will provide
to the Corporation the use of assets deemed worth U.S. $[ * ] in the
form of know how, contacts, the MTC name and support structure. The use
of these assets will be provided to the Corporation free of charge for
the duration of this Agreement.


2. The JV Partners collectively will contribute a total
amount in cash of U.S. $[ * ], of which U.S. $[ * ] will be contributed
in the form of share capital, and U.S. $[ * ] will be contributed in the
form of [ * ]. This amount will be paid within the first two weeks of
December 1995. In addition the JV Partners will provide to the
Corporation the use of assets deemed worth U.S. $[ * ]. These assets
comprise the assets of ATC, including its know how, trained staff, the
base of customers which are billed directly by ATC or one of its
affiliates, office equipment, contacts, distribution agreement with
Salland Corporation, billing and customer service software. A balance
sheet of ATC, in which these assets are stated, has been attached to
this Agreement as Exhibit A. The use of these assets will be provided to
the Corporation free of charge for the duration of this Agreement.


3. The Shareholders agree, that in the case the above
funding arrangements will not be adequate, the Shareholders will discuss
additional funding to the Corporation on a case by case basis.


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* Confidential treatment requested; omitted portion filed separately with the
Commission.


D. Issuance of Shares.


1. MTC, directly or indirectly, shall receive ____________
shares of the Common Stock, representing [ * ] percent ([ * ]%) of the
total issued and outstanding shares Common Stock.


2. The JV Partners, directly or indirectly, collectively
shall receive _________________ shares of the Common Stock, representing
[ * ] percent ([ * ]%) of the total issued and outstanding shares of
Common Stock.


3. MTC and each JV Partner each shall notify the
Corporation of its intention not to receive and hold its respective
share certificates of the Common Stock in accordance with the laws of
the Netherlands.


E. Assignment of Credit Insurance. The JV Partners shall cause ATC
------------------------------ to assign to the Corporation all credit insurance policies with respect to Subscribers, and the Corporation immediately shall assign such policies to MTC. Furthermore, the Corporation shall require credit insurance policies in connection with sales to each Subscriber and shall assign all such policies to MTC. Bach such credit insurance policy shall insure no less than eighty percent (80%) of the retail amount of MTC Services billed to such Subscribers.


In the event that contractual or legal requirements prevent the JV Partners from assigning such credit insurance policies, the JV Partners shall cause such credit insurance policies to be pledged to MTC.


F. Financing. The Parties shall make all reasonable efforts to
--------- cause the Corporation to operate on a self-supporting basis. If and when the Corporation requires additional fluids for its operation, the board of supervisory directors of the Corporation shall direct the managing directors to arrange commercial lines of credit sufficient to finance the Corporation's on- going operations.


G. Security for Obligations to MTC. The Corporation shall take
------------------------------- appropriate actions to limit any credit exposure of MTC with respect to all wholesale sales of MTC Services to the Corporation for sale by the Corporation to Subscribers. Notwithstanding the foregoing, the Corporation shall provide to MTC such guaranties as shall deemed necessary by the Shareholders upon consultation with the board of supervisory directors.


H. Proprietary Information. Notwithstanding any other provision
----------------------- contained herein, all product designs and design projects, technical, secret process, product development techniques or plans, invention and research projects, trade "know-how", methods of operation, formulae, software, algorithms, computer processing systems, object and source codes, user manuals, system documentation, training and marketing materials, technical data, and other similar material and information are and shall remain the sole and exclusive property of MTC; provided, that all such proprietary information owned or developed by ATC or in which ATC claimed an interest prior to the Effective Date, and all such proprietary information owned or developed by


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* Confidential treatment requested; omitted portion filed separately with the
Commission.


the Corporation or in which the Corporation claims an interest, is and shall remain the sole and exclusive property of the Corporation. MTC shall license the Corporation to market and distribute MTC Services in connection therewith during the term of this Agreement.


I. Subscribers. Once MTC has completed the implementation of its
----------- new billing platform, it is the intent of the parties to migrate Subscribers to a direct billing arrangement by MTC and treated as MTC Customers.


III. OBJECTS AND PURPOSES OF THE CORPORATION


A. Actions. All actions with respect to the Corporation shall be
------- made pursuant to a resolution approved by the board of supervisory directors or the Shareholders, as appropriate.


B. Authorized Activities. The authorized business activities of the
--------------------- Corporation shall be:


1. To distribute MTC Services in the Territory;


2. To provide customer support to MTC Customers and
Subscribers;


3. To find and appoint New Affiliates within the Territory;


4. To establish Secondary Joint Ventures within the
Territory pursuant to Section III.C. below;


5. To make all Affiliate Support Services available to any
Master Affiliate Licensee, M-net representative, or Secondary Joint
Venture;


6. To make direct sales to MTC Customers or Subscribers;
and


7. Any other activities consistent with the terms of this
Agreement and otherwise as authorized from time to time by the
Shareholders.


C. New Affiliates. New Affiliates appointed by the Corporation
-------------- shall enter into written marketing and license agreements with the Corporation, in form and substance acceptable to MTC (each, a "New Affiliate License Agreement"). Without limiting the generality of the foregoing, each New Affiliate License Agreement shall provide that such agreement is assignable to MTC, and the Corporation shall assign such agreement to MTC immediately after its execution by the parties thereto.


D. Secondary Joint Ventures. In the event that the Corporation or
------------------------ MTC identifies a Third Party in the Territory then MTC, in its sole discretion, may offer any such Third Party a joint venture arrangement with MTC (a "Secondary Joint Venture") under the following terms


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and conditions and other such terms and conditions as shall be agreed upon by MTC, the Corporation, and the Third Party in the respective Secondary Joint Venture Agreement:


1. The division of shares between the Third Party, MTC and
the Corporation will be decided on a case by case basis.


2. Each Secondary Joint Venture Agreement will set forth
sales and revenue criteria, and the failure of the Secondary Joint
Venture to meet such criteria shall constitute an event of default
thereunder that shall give MTC the right, but not the obligation, to
purchase at fair market value the shares of such Secondary Joint Venture
held by either the Third Party or the Corporation.


3. The day-to-day management of any Secondary Joint Venture
shall be conducted by the Third Party. The Corporation shall provide
executive management and support services to the Secondary Joint Venture
as set forth in the Business Plan.


4. MTC, at its sole discretion, may agree with the JV
Partners and/or the Corporation to establish other joint ventures
outside of the Territory, but within Europe.


E. Restricted Activities.
---------------------


1. During the term of this Agreement and for a period of
two YEARS following the termination thereof, no JV Partner shall
directly or indirectly engage in, invest in, or perform any business
competitive with the business activities of the Corporation except as
described in Section III.F. below without the prior written consent of
MTC.


2. The Corporation may only contact existing MTC Customers
(other than those MTC Customers which became MTC Customers through ATC
or one of its Sub-Affiliates) with the written approval of the
appropriate Existing Affiliate and MTC.


F. Affiliate Relations. The JV Partners acknowledge that,
------------------- notwithstanding any provision to the contrary contained herein, MTC and/or any of its Existing Affiliates currently may market and sell MTC Services in the Territory and that Existing Affiliates and New Affiliates will continue to be authorized to sell and market MTC Services in the Territory. MTC will use its best efforts to encourage the cooperation of Existing Affiliates with the Corporation with respect to such sales and distribution activities, particularly in the areas of certain support services that will be offered by the Corporation including: (a) Affiliate Support Services; (b) promotion, public relations and advertising; and (c) contract administration and MTC Customer database services. Notwithstanding the foregoing, the JV Partners acknowledge that Existing Affiliates are parties to binding contracts with MTC that do not contain such provisions and that modification of such contracts will be time-consuming and, in some cases, may not be possible without the consent of the Existing Affiliates. Further details regarding the development of relations between the Corporation, Existing Affiliates, M-Net representatives and MTC Customers will be described in the Business Plan.


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G. Revenues of the Corporation. The Corporation shall earn revenues
--------------------------- as follows:


1. Sales by New Affiliates. With respect to sales of MTC
Services by each New Affiliate within the Territory, during the term of
this Agreement the Corporation will receive from MTC a commission equal
to the greater of (a) [ * ] percent ([ * ]%) of such Sales Revenue, or
(b) the difference between (i) [ * ] percent ([ * ]%) of such Sales
Revenue and (ii) the commission paid to such New Affiliate; provided,
that any agreements which provide for commissions of greater than [ * ]
percent ([ * ]%) to any New Affiliate must be approved in advance by MTC
in writing.


2. Sales by Existing Affiliates. MTC will use its best
efforts to propose that Existing Affiliates modify their respective
agreements with MTC to provide that, with respect to sales of MTC
Services by each Existing Affiliate within the Territory who agrees to
use the Affiliate Support Services provided by the Corporation, the
Corporation will receive from the commissions currently paid to such
Existing Affiliate during the term of this Agreement a commission equal
to (a) [ * ] percent ([ * ]%) of such Sales Revenue up to the level of
Sales Revenue of such Existing Affiliate as of the date such Existing
Affiliate agreed to use the support services provided by the Corporation
(the "Existing Sales"), (b) [ * ] percent ([ * ]%) of the Sales Revenue
by such Existing Affiliate in excess of the Existing Sales, and (c)
[ * ] percent ([ * ]%) of the Sales Revenue of any Sub-Affiliate
appointed by the Existing Affiliate following the effective date of such
agreement. The Corporation will earn no commission with respect to the
Sales Revenue of an Existing Affiliate unless such Existing Affiliate
enters into a written modification of its existing agreements with MTC
pursuant to which such Existing Affiliate agrees to (y) use the
Affiliate Support Services provided by the Corporation, and (z) modify
its commission schedule with MTC.


3. Sales by Secondary Joint Ventures. With respect to sales
of MTC Services by any Secondary Joint Venture within the Territory,
during the term of this Agreement the Corporation will receive from MTC
a commission of between [ * ] percent ([ * ]%) to [ * ] percent ([ * ]%)
of such Sales Revenue, as agreed upon by the Parties from time to time.


4. Sales by M-net Representatives. With respect to sales of
Services by M-net representatives within the Territory, during the term
of this Agreement the Corporation will receive from MTC a commission
equal to [ * ] percent ([ * ]%) of eligible M-net Sales Revenue and as
defined in the Business Plan.

5. Equity in Secondary Joint Ventures. The Corporation will
receive no less than [ * ] percent ([ * ]%) of the initial equity
distribution in any Secondary Joint Venture, subject to (a) agreement
with the Third Party, (b) compliance by the JV Partners with the terms
of this Agreement and during the term hereof and (c) repurchase of such
equity interest by MTC as provided in the Secondary Joint Venture
Agreement between MTC, the Corporation, and the Third Party.


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* Confidential treatment requested; omitted portion filed separately with the Commission.


IV. SHAREHOLDERS


A. Time and Place of Meetings. Meetings of the Shareholders for any
-------------------------- purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, (i) may be called by any Shareholder, and (ii) shall be called at the request in writing of a majority of the board of supervisory directors. Such request shall state the purpose or purposes of the proposed meeting. Written notice of a Shareholder meeting stating the place, date and hour of the meeting, and the purpose or purposes for which the me ...