Exhibit 10.36
CO-OPERATION AND PURCHASE AGREEMENT
-----------------------------------
between
Starfon Telecom Services AG
(hereinafter referred to as SF)
and
Finance Market S.A.
(hereinafter referred to as FM)
and
Mr. Massimo Scotti
and Mr. Claudio Zambon
October 2000
[Ref.: ap/sf-fm-jv/06/10/2000]
<PAGE>
Introduction 29
Agreement 30
1 General 30
3 SF's Contribution 31
4 FM's Contribution 31
5 Confidentiality 32
6 Business Plan 33
7 Validity 33
8 Signatures 33
<PAGE>
Introduction
This Co-operation and purchase agreement dated the 6. October 2000 is:
BETWEEN:
i.) Starfon Telecom Services AG a company organised and existing under the lows
of Switzerland, having its office at Dachslernstrasse 67, CH-8048 Zurich,
Switzerland hereinafter referred to as SF and 100% owned by UTG Communications
International Inc a company quoted at NASDAQ in New York U.S.A under the ticker
"UTGC".
and
ii.) Finance Market S.A. company organised and existing under the laws of
Switzerland, having its office at Via Cattori 5 , CH-6902 Lugano
Switzerland hereinafter referred to as FM.
and
iii.) Mr. Massimo Scotti an individual, Italian citizen, majority
shareholder of Finance Market SA having 64.02 % equity in FM and
having its domicile in Casa la Meridiana, CH-6986 Miglieglia,
Switzerland.
and
iv.) Mr. Claudio Zambon an individual, Italian citizen, shareholder of
Finance Market SA having 30.98 % equity in FM and having its domicile
in Casa Santarelli 51, Roma, Italia
WHEREAS:
--------
The parties desire to enter into the following Co-operation and
Purchase agreement for the business of national and/or international Internet,
E-commerce, telecommunication services and/or telephone cards and provide
expertise, services, technology and funding for the further development of such
business opportunities in Switzerland.
<PAGE>
Agreement
It is hereby agreed:
1 General
1.1 This Co-operation and Purchase Agreement is intended to set out the
principal terms of a formal and binding Agreement ("the Agreement")
which the parties desire to enter.
1.2 The Agreement completion date shall be before October 31, 2000.
1.3 It is envisaged that after 18 month of operation i.e. after the
signature of this Agreement starting with 15. October 2000 and both
FM and SF working together during this period of time i.e. 15.Oct.
2000 and 14th April 2002 under the obligations defined in this
Agreement, SF will purchase 95% of FM's equity as defined below into
this Agreement. The parties agrees that before SF shall purchase any
equity in FM's business, FM shall be evaluated by experts (chartered
accounts as the parties may agree) per:
1.3.1.1 30th April 2001,
1.3.1.2 31st October 2001
1.3.1.3 30th April 2002.
Any of the above mentioned dates is called "Valuation Date".
1.3.2 SF shall purchase and FM shall sell to SF according to the following
1.3.2.1 30% equity of FM's business at 30th April 2001
1.3.2.2 30% equity of FM's business at 31st October 2001
1.3.2.3 35% equity of FM's business at 30th April 2002
1.3.3 There are two (2) valuation formulas to evaluate FM's telephony and
internet access business:
"Formula I":
FM's Value is = ((9 x Annual Profit(loss) + (4 x last month
turn over))/2 or "Formula II" :
FM's Value is = ((16 x Annual Profit(loss) + (6 x last
month turn over))/2
1.3.4 Formula I shall be applicable at any Valuation Date in the case that
FM does not reach the minimum telephony plus internet access revenue
per month as listed below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1.3.4.1 CHF 1'000'000.- Telephony and Internet Access per month at 30th April 2001 latest 31 of May 2001.
1.3.4.2 CHF 1'500'000.- Telephony and Internet Access per month at 31st October 2001 latest 30 November 2001
1.3.4.3 CHF 2'000'000.- Telephony and Internet Access per month at 30th April 2002 latest 31 of May 2002
</TABLE>
1.3.5 Formula II shall be applicable at any Valuation Date in the case that
FM does reach the minimum revenue per month as listed above under
1.3.4
1.3.6 There is one (1) valuation formula to evaluate FM's e-commerce
business called
" Formula E": FM's Value is = ((25 x Profit(loss) +
(2 x monthly Turnover))/2
1.4 The total value of FM business at any Valuation Date shall be the
total between "Formula I" or "Formula II" plus Formula E.
1.5 The equivalent of FM's total value shall be paid in UTGC shares. The
UTGC shares value shall be the last month average price (OTC NASDAQ)
where the minimum and the maximum of UTG's share price shall be fixed
at USD 10.- respectively USD 50.-.
1.6 It shall be a condition for execution of the Agreement that Mr.
Scotti and the other shareholders deposit the 95% equity share
certificates into an escrow account.
1.7 SF contribution is anticipated to be telecommunication and financial
services in relation to the operation of FM.
1.8 FM contribution is anticipated to be the operation and the
development of FM's business as described in FM documents i.e.
e-commerce, internet and telephony services, appended in the Annex 1
(to be completed by FM)
3 SF's Contribution
3.1 SF as a part of its contribution shall use its best efforts to give
active support to market the FM products via SF affiliated companies.
3.2 SF shall entitle the FM to use the registered trademarks, brand name
and logos of SF for the products related to the SF telecommunication
services as per appended authorisation in Annex 2. (to be completed)
3.3 SF shall assist the FM to finalise technical, marketing and
management planning summarised into the appended business model in
Annex 3.
3.4 SF shall provide to the FM the telephony access and the capacity
required to connect up to 20'000 clients to the world wide
telecommunication destinations via SF Infrastructure.
3.5 SF shall provide the adequate administrative, financial and technical
assistance to the FM.
3.6 SF shall operate and maintain the telecommunication infrastructure
(transmission and/or switching) related to the operation of the FM
including the Swiss pre-selection code "10723".
3.7 SF shall weekly and/or monthly provide the FM the detailed data
records required by the ongoing process of billing for the monthly
invoicing process.
3.8 SF shall invoice FM for all telecommunications services according to
the following payment condition: SF invoices monthly FM for 0800...
access/transit to a third party internet service and/or back bone
provider, and 10723 pre-selected telephony services. 50 (fifty) % of
the monthly invoiced amounts shall be paid by FM to SF 30 days after
the invoice submission the rest of 50 (fifty) % shall be paid by FM
to SF 90 days after invoice submission.
4 FM's Contribution
4.1 FM shall operate and develop the internet, e-commerce and telephony
services as described in the appended documentation according to the
appended roll -out and/or business plan appended into annex 1.
4.2 In addition not later than 1st of May 2001 FM shall:
- deliver the entire product documentation and actual contractual
work for internet, e-commerce and telephony products
- deliver the entire documentation (procedures) required by the FM
in order to execute the contractual obligations towards the FM's
clientele.
- distribute and sign with customers in Switzerland the number of
contracts agreed in the roll-out and/or business plan for
internet, telephony and e-commerce services within the next 18
(eighteen ) month after the signature of this agreement i.e.
until 31 March 2001. The product description and the related
general terms and condition of the above mentioned service
contracts are appended in Annex 4
- provide accounting and money collection software according to
the money collection methods described into FM documentation
i.e. (Credit Cards, Pay Box, etc)
4.3 FM shall entitle the SF to make use of the retail, and/or agent
agreement(s) as signed with FM as appended in Annex 5 "Agent
Agreement between FM and Sales Agent" dated before 31st March 2001,
for the following listed , but not limited to, Shops and/or regional
and/or national agents in Switzerland, and/or Italy or countries the
parties may agree.
4.4 FM shall pay SF invoices regarding the internet and telecommunication
services according to article 3.8
4.5 FM shall produce (in a format acceptable to the parties) and deliver
to SF by Fax and/or e-mail monthly cash flow, inventory
reconciliation and operating reports.
4.6 Detailed FM's accounts will be maintained, and monthly financial
statement produced, in format acceptable to the parties.
4.7 FM invoices monthly SF for 0800... access/transit to a third party
internet service and/or back bone provider, and telephony services.
50 (fifty) % of the monthly invoiced amounts shall be paid by FM to
SF 30 days after the invoice submission the rest of 50 (fifty) %
shall be paid by FM to SF 90 days after invoice submission.
5 Confidentiality
5.1 The Parties will enter into confidentiality a non-compete agreements in the
field of telecommunications and/or internet services in the territory of
Switzerland for a period of one (1) year or such other period may be agreed by
the Parties.
5.2 During the Term of this agreement it is anticipated that the Parties will
disclose to each other information and materials of a proprietary and/or
confidential nature and each agrees to except such information and/or materials
identified in writing as proprietary and/or confidential and not to disclose,
copy or transfer same to other parties, without the prior written consent of the
provider of such confidential materials or information.
6 Business Plan
It shall be a condition for execution of the Agreement that a
Business Plan and an Operating Budget are finalised. This budget may be changed
and/or adapted from time to time by the parties. Any changement requires the
written consent of both parties.
7 Validity
7.1 These Agreement entry into force with the signature of both parties.
7.2 These Co-operation Agreement is valid until 1. Nov.2002.
8 Signatures
Starfon Telecom Services AG
by its duly authorised representative
Date: October 6, 2000______
Place: Zurich ______________
Signature: /S/ U. Ernst_____________
Title: Dir._________________
Signature: /S/ A. Popovici ____________
Titel: Dir._________________
Mr. M. Scotti
Signature: /S/ M. Scotti______________
Mr. C. Zambon
Signature: /S/ C. Zambon___________
