Document:

Exhibit 99.1

 

PARTICLE
DRILLING TECHNOLOGIES, INC.

 

2005
STOCK INCENTIVE PLAN

 

I.                                         PURPOSE

 

The purpose of
the PARTICLE DRILLING
TECHNOLOGIES, INC. 2005 STOCK INCENTIVE PLAN (the “Plan”) is to
provide a means through which PARTICLE DRILLING TECHNOLOGIES, INC., a Nevada corporation
(the “Company”), and its Affiliates may attract able persons to serve as
Directors or Consultants or to enter the employ of the Company and its
Affiliates and to provide a means whereby those individuals upon whom the
responsibilities of the successful administration and management of the Company
and its Affiliates rest, and whose present and potential contributions to the
Company and its Affiliates are of importance, can acquire and maintain stock
ownership, thereby strengthening their concern for the welfare of the Company
and its Affiliates.  A further purpose of
the Plan is to provide such individuals with additional incentive and reward
opportunities designed to enhance the profitable growth of the Company and its
Affiliates.  Accordingly, the Plan
provides for granting Incentive Stock Options, options that do not constitute
Incentive Stock Options, Restricted Stock Awards, or any combination of the
foregoing, as is best suited to the circumstances of the particular employee, Consultant
or Director as provided herein.

 

II.                                     DEFINITIONS

 

The following
definitions shall be applicable throughout the Plan unless specifically
modified by any paragraph:

 

(a)           “Affiliate” means any corporation, partnership, limited
liability company or partnership, association, trust or other organization
which, directly or indirectly, controls, is controlled by, or is under common
control with, the Company.  For purposes
of the preceding sentence, “control” (including, with correlative meanings, the
terms “controlled by” and “under common control with”), as used with respect to
any entity or organization, shall mean the possession, directly or indirectly,
of the power (i) to vote more than 50% of the securities having ordinary voting
power for the election of directors of the controlled entity or organization,
or (ii) to direct or cause the direction of the management and policies of the
controlled entity or organization, whether through the ownership of voting
securities or by contract or otherwise.

 

(b)           “Award” means, individually or collectively, any Option
or Restricted Stock Award.

 

(c)           “Board” means the Board of Directors of the Company.

 

(d)           “Code” means the Internal Revenue Code of 1986, as
amended.  Reference in the Plan to any
section of the Code shall be deemed to include any amendments or successor
provisions to such section and any regulations under such section.

 

(e)           “Committee” means a committee of the Board that is
selected by the Board as provided in Paragraph IV(a).

 

 

(f)            “Common Stock” means the common stock, par value $0.001
per share, of the Company, or any security into which such common stock may be
changed by reason of any transaction or event of the type described in
Paragraph IX.

 

(g)           “Company” means Particle Drilling Technologies, Inc., a
Nevada corporation, and any successor thereto that adopts the Plan.

 

(h)           “Consultant” means any person who is not an employee or a
Director and who is providing advisory or consulting services to the Company or
any Affiliate.

 

(i)            “Corporate Change” shall have the meaning assigned to
such term in Paragraph IX(c) of the Plan.

 

(j)            “Director” means an individual who is a member of the
Board.

 

(k)           An
“employee” means any person
(including a Director) in an employment relationship with the Company or any
Affiliate.

 

(l)            “Fair Market Value” means, as of any specified date, the
mean of the high and low sales prices of the Common Stock (i) reported by the
National Market System of NASDAQ on that date or (ii) if the Common Stock is
listed on a national stock exchange, reported on the stock exchange composite
tape on that date (or such other reporting service approved by the Committee);
or, in either case, if no prices are reported on that date, on the last
preceding date on which such prices of the Common Stock are so reported.  If the Common Stock is traded over the
counter at the time a determination of its fair market value is required to be
made hereunder, its fair market value shall be deemed to be equal to the average
between the reported high and low or closing bid and asked prices of Common
Stock on the most recent date on which Common Stock was publicly traded.  In the event Common Stock is not publicly
traded at the time a determination of its value is required to be made
hereunder, the determination of its fair market value shall be made by the
Committee in such manner as it deems appropriate.

 

(m)          “Incentive Stock Option” means an incentive stock option
within the meaning of section 422 of the Code.

 

(n)           “1934 Act” means the
Securities Exchange Act of 1934, as amended.

 

(o)           “Option” means an Award granted under Paragraph VII of
the Plan and includes both Incentive Stock Options to purchase Common Stock and
Options that do not constitute Incentive Stock Options to purchase Common
Stock.

 

(p)           “Option Agreement” means a written agreement between the
Company and a Participant with respect to an Option.

 

(q)           “Participant” means an employee, Consultant, or Director
who has been granted an Award.

 

(r)            “Plan” means the Particle Drilling Technologies, Inc.
2005 Stock Incentive Plan, as amended from time to time.

 

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(s)           “Restricted Stock Agreement” means a written agreement
between the Company and a Participant with respect to a Restricted Stock Award.

 

(t)            “Restricted Stock Award” means an Award granted under
Paragraph VIII of the Plan.

 

(u)           “Stock Appreciation Right” shall have the meaning
assigned to such term in Paragraph VII(d) of the Plan.

 

III.                                 EFFECTIVE
DATE AND DURATION OF THE PLAN

 

The Plan shall
become effective upon the date of its adoption by the Board and may be
presented to the stockholders of the Company for approval within 12 months
therafter. If such stockholder approval is not obtained within 12 months of the
adoption of the Plan by the Board, the Plan shall remain in full force and
effect; provided, however, that notwithstanding any provision in the Plan or in
any Option Agreement to the contrary, no Incentive Stock Options shall
thereafter be granted under the Plan and all Options theretofore granted and
intended to constitute Incentive Stock Options shall be automatically converted
into Options that do not constitute Incentive Stock Options without need for
any action on the part of the Board, the Committee or any Participant.  Further, notwithstanding any provision in the
Plan or in any Option Agreement to the contrary, no Option intended to
constitute an Incentive Stock Option shall be exercisable prior to the
expiration of 12 months following the date of the adoption of the Plan by the
Board.  No further Awards may be granted
under the Plan after 10 years from the date the Plan is adopted by the
Board.  The Plan shall remain in effect
until all Options granted under the Plan have been satisfied or expired, and
all Restricted Stock Awards granted under the Plan have vested or been
forfeited.

 

IV.                                ADMINISTRATION

 

(a)           Composition of
Committee.  The Plan shall
be administered by a committee of, and appointed by, the Board that shall be
comprised solely of two or more “Non-Employee Directors” (as defined in SEC
Rule 16b-3 promulgated under the 1934 Act, as such may be amended from time to
time, and any successor rule, regulation or statute fulfilling the same or
similar function).

 

(b)           Powers.  Subject to the express provisions of the
Plan, the Committee shall have authority, in its discretion, to determine which
employees, Consultants, or Directors shall receive an Award, the time or times
when such Award shall be made, whether an Incentive Stock Option or
nonqualified Option shall be granted, and the number of shares to be subject to
each Option or Restricted Stock Award. 
In making such determinations, the Committee shall take into account the
nature of the services rendered by the respective employees, Consultants, or
Directors, their present and potential contribution to the Company’s success
and such other factors as the Committee in its discretion shall deem relevant.

 

(c)           Additional
Powers.  The Committee
shall have such additional powers as are delegated to it by the other
provisions of the Plan.  Subject to the
express provisions of the Plan, this shall include the power to construe the
Plan and the respective agreements executed hereunder, to prescribe rules and
regulations relating to the Plan, and to determine the terms, restrictions and
provisions of the agreement relating to each Award, including such terms,

 

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restrictions
and provisions as shall be requisite in the judgment of the Committee to cause
designated Options to qualify as Incentive Stock Options, and to make all other
determinations necessary or advisable for administering the Plan.  The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any
agreement relating to an Award in the manner and to the extent it shall deem
expedient to carry it into effect.  The
determinations of the Committee on the matters referred to in this Paragraph IV
shall be conclusive.

 

V.                                    SHARES
SUBJECT TO THE PLAN; GRANT OF AWARDS

 

(a)           Shares Subject
to the Plan.  Subject to
adjustment in the same manner as provided in Paragraph IX with respect to
shares of Common Stock subject to Options then outstanding, the aggregate
number of shares of Common Stock that may be issued under the Plan, and the
aggregate number of shares of Common Stock that may be issued under the Plan
through Incentive Stock Options, shall not exceed 2,000,000 shares.  Shares shall be deemed to have been issued
under the Plan only to the extent actually issued and delivered pursuant to an
Award.  To the extent that an Award
lapses or the rights of its holder terminate, any shares of Common Stock
subject to such Award shall again be available for the grant of an Award under
the Plan.  In addition, shares issued
under the Plan and forfeited back to the Plan, shares surrendered in payment of
the exercise price or purchase price of an Award, and shares withheld for
payment of applicable employment taxes and/or withholding obligations
associated with an Award shall again be available for the grant of an Award
under the Plan.

 

(b)           Grant of Awards.
The Committee may from time to time grant Awards to one or more employees,
Consultants, or Directors determined by it to be eligible for participation in
the Plan in accordance with the terms of the Plan.

 

(c)           Stock Offered.  Subject to the limitations set forth in
Paragraph V(a), the stock to be offered pursuant to the grant of an Award may
be authorized but unissued Common Stock or Common Stock previously issued and
outstanding and reacquired by the Company. 
Any of such shares which remain unissued and which are not subject to
outstanding Awards at the termination of the Plan shall cease to be subject to
the Plan but, until termination of the Plan, the Company shall at all times
make available a sufficient number of shares to meet the requirements of the
Plan.

 

VI.                                ELIGIBILITY

 

Awards may be
granted only to persons who, at the time of grant, are employees, Consultants,
or Directors.  An Award may be granted on
more than one occasion to the same person, and, subject to the limitations set
forth in the Plan, such Award may include an Incentive Stock Option, an Option
that is not an Incentive Stock Option, a Restricted Stock Award, or any
combination thereof.

 

VII.                            STOCK
OPTIONS

 

(a)           Option Period.  The term of each Option shall be as specified
by the Committee at the date of grant; provided, however, that each such Option
by its terms shall not be exercisable after the expiration of ten years from
the date of grant.

 

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(b)           Limitations on
Exercise of Option.  An
Option shall be exercisable in whole or in such installments and at such times
as determined by the Committee.

 

(c)           Special
Limitations on Incentive Stock Options.  An Incentive Stock Option may be granted only
to an individual who is employed by the Company or any parent or subsidiary
corporation (as defined in section 424 of the Code) of the Company at the time
the Option is granted. To the extent that the aggregate fair market value
(determined at the time the respective Incentive Stock Option is granted) of
stock with respect to which Incentive Stock Options are exercisable for the
first time by an individual during any calendar year under all incentive stock
option plans of the Company and its parent and subsidiary corporations exceeds
$100,000, such Incentive Stock Options shall be treated as Options which do not
constitute Incentive Stock Options. The Committee shall determine, in
accordance with applicable provisions of the Code, Treasury Regulations and
other administrative pronouncements, which of a Participant’s Incentive Stock
Options will not constitute Incentive Stock Options because of such limitation
and shall notify the Participant of such determination as soon as practicable
after such determination.  No Incentive
Stock Option shall be granted to an individual if, at the time the Option is
granted, such individual owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of its parent
or subsidiary corporation, within the meaning of section 422(b)(6) of the Code,
unless (i) at the time such Option is granted the option price is at least 110%
of the Fair Market Value of the Common Stock subject to the Option and (ii)
such Option by its terms is not exercisable after the expiration of five years
from the date of grant.  An Incentive
Stock Option shall not be transferable otherwise than by will or the laws of
descent and distribution, and shall be exercisable during the Participant’s
lifetime only by such Participant or the Participant’s guardian or legal
representative.

 

(d)           Option
Agreement.  Each Option
shall be evidenced by an Option Agreement in such form and containing such
provisions not inconsistent with the provisions of the Plan as the Committee
from time to time shall approve, including, without limitation, provisions to
qualify an Incentive Stock Option under section 422 of the Code.  Each Option Agreement shall specify the
effect of termination of (i) employment, (ii) the consulting or advisory
relationship, or (iii) membership on the Board, as applicable, on the
exercisability of the Option.  An Option
Agreement may provide for the payment of the option price, in whole or in part,
by the delivery of a number of shares of Common Stock (plus cash if necessary)
having a Fair Market Value equal to such option price.  Moreover, an Option Agreement may provide for
a “cashless exercise” of the Option by establishing procedures satisfactory to
the Committee with respect thereto. 
Further, an Option Agreement may provide for the surrender of the right
to purchase shares under the Option in return for a payment in cash or shares
of Common Stock or a combination of cash and shares of Common Stock equal in
value to the excess of the Fair Market Value of the shares with respect to
which the right to purchase is surrendered over the option price therefor (“Stock
Appreciation Rights”), on such terms and conditions as the Committee in its
sole discretion may prescribe.  In the
case of any such Stock Appreciation Right that is granted in connection with an
Incentive Stock Option, such right shall be exercisable only when the Fair
Market Value of the Common Stock exceeds the price specified therefor in the
Option or the portion thereof to be surrendered.  The terms and conditions of the respective
Option Agreements need not be identical. 
Subject to the consent of the Participant, the Committee may, in its
sole discretion, amend an outstanding Option Agreement from time to time in any
manner that is not inconsistent with the provisions of the Plan (including,
without limitation, an

 

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amendment that
accelerates the time at which the Option, or a portion thereof, may be
exercisable).

 

(e)           Option Price
and Payment.  The price at
which a share of Common Stock may be purchased upon exercise of an Option shall
be determined by the Committee but, subject to adjustment as provided in
Paragraph IX, such purchase price shall not be less than the Fair Market Value
of a share of Common Stock on the date such Option is granted.  The Option or portion thereof may be
exercised by delivery of an irrevocable notice of exercise to the Company, as
specified by the Committee.  The purchase
price of the Option or portion thereof shall be paid in full in the manner
prescribed by the Committee.  If
permitted by applicable law, the Company may assist a Participant who has
received an Option in the payment of such Option’s purchase price by lending
the amount of some or all of such purchase price to such Participant on such
terms and such rates of interest and upon such security (or unsecured) as shall
have been authorized by or under authority of the Board; provided, however,
that the Company may not under any circumstances lend any amount or otherwise
extend credit or arrange for the extension of credit to any Participant who is
a Director or an executive officer of the Company.  Separate stock certificates shall be issued
by the Company for those shares acquired pursuant to the exercise of an
Incentive Stock Option and for those shares acquired pursuant to the exercise
of any Option that does not constitute an Incentive Stock Option.

 

(f)            Stockholder
Rights and Privileges. 
The Participant shall be entitled to all the privileges and rights of a
stockholder only with respect to such shares of Common Stock as have been
purchased under the Option and for which certificates of stock have been
registered in the Participant’s name.

 

(g)           Options and
Rights in Substitution for Options Granted by Other Employers.  Options and Stock Appreciation Rights may be
granted under the Plan from time to time in substitution for options held by
individuals providing services to corporations or other entities who become
employees, Consultants, or Directors as a result of a merger or consolidation
or other business transaction with the Company or any Affiliate.

 

VIII.                        RESTRICTED
STOCK AWARDS

 

(a)           Forfeiture
Restrictions To Be Established by the Committee.  Shares of Common Stock that are the subject
of a Restricted Stock Award shall be subject to restrictions on disposition by
the Participant and an obligation of the Participant to forfeit and surrender
the shares to the Company under certain circumstances (the “Forfeiture
Restrictions”).  The Forfeiture Restrictions
shall be determined by the Committee in its sole discretion, and the Committee
may provide that the Forfeiture Restrictions shall lapse upon (i) the
attainment of one or more performance targets established by the Committee,
(ii) the Participant’s continued employment with the Company or an Affiliate or
continued service as a Consultant or Director for a specified period of time,
(iii) the occurrence of any event or the satisfaction of any other condition
specified by the Committee in its sole discretion, or (iv) a combination of any
of the foregoing.  Each Restricted Stock
Award may have different Forfeiture Restrictions, in the discretion of the
Committee.

 

(b)           Other Terms and
Conditions.  Common Stock
awarded pursuant to a Restricted Stock Award shall be represented by a stock
certificate registered in the name of the Participant.

 

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Unless
provided otherwise in a Restricted Stock Agreement, the Participant shall have
the right to receive dividends with respect to Common Stock subject to a
Restricted Stock Award, to vote Common Stock subject thereto and to enjoy all
other stockholder rights, except that (i) the Participant shall not be entitled
to delivery of the stock certificate until the Forfeiture Restrictions have
expired, (ii) the Company shall retain custody of the stock until the
Forfeiture Restrictions have expired, (iii) the Participant may not sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of the stock until
the Forfeiture Restrictions have expired, and (iv) a breach of the terms and
conditions established by the Committee pursuant to the Restricted Stock
Agreement shall cause a forfeiture of the Restricted Stock Award.  At the time of such Award, the Committee may,
in its sole discretion, prescribe additional terms, conditions or restrictions
relating to Restricted Stock Awards, including, but not limited to, rules
pertaining to the termination of employment or service as a Consultant or
Director (by retirement, disability, death or otherwise) of a Participant prior
to expiration of the Forfeitures Restrictions. 
Such additional terms, conditions or restrictions shall be set forth in
a Restricted Stock Agreement made in conjunction with the Award.

 

(c)           Payment for
Restricted Stock.  The
Committee shall determine the amount and form of any payment for Common Stock
received pursuant to a Restricted Stock Award, provided that in the absence of
such a determination, a Participant shall not be required to make any payment
for Common Stock received pursuant to a Restricted Stock Award, except to the
extent otherwise required by law.

 

(d)           Committee’s
Discretion to Accelerate Vesting of Restricted Stock Awards.  The Committee may, in its discretion and as
of a date determined by the Committee, fully vest any or all Common Stock
awarded to a Participant pursuant to a Restricted Stock Award and, upon such
vesting, all restrictions applicable to such Restricted Stock Award shall
terminate as of such date.  Any action by
the Committee pursuant to this Subparagraph may vary among individual
Participants and may vary among the Restricted Stock Awards held by any
individual Participant.

 

(e)           Restricted Stock Agreements.   At the time any Award is made under this
Paragraph VIII, the Company and the Participant shall enter into a Restricted
Stock Agreement setting forth each of the matters contemplated hereby and such
other matters as the Committee may determine to be appropriate.  The terms and provisions of the respective
Restricted Stock Agreements need not be identical. Subject to the consent of the Participant, the Committee
may, in its sole discretion, amend an outstanding Restricted Stock Agreement
from time to time in any manner that is not inconsistent with the provisions of
the Plan.

 

IX.                                RECAPITALIZATION
OR REORGANIZATION

 

(a)           No Effect on
Right or Power.  The
existence of the Plan and the Awards granted hereunder shall not affect in any
way the right or power of the Board or the stockholders of the Company to make
or authorize any adjustment, recapitalization, reorganization or other change
in the Company’s or any Affiliate’s capital structure or its business, any
merger or consolidation of the Company or any Affiliate, any issue of debt or
equity securities ahead of or affecting Common Stock or the rights thereof, the
dissolution or liquidation of the Company or any Affiliate or any sale, lease,
exchange or other disposition of all or any part of its assets or business or
any other corporate act or proceeding.

 

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(b)           Subdivision or
Consolidation of Shares; Stock Dividends.  The shares with respect to which Options may
be granted are shares of Common Stock as presently constituted, but if, and
whenever, prior to the expiration of an Option theretofore granted, the Company
shall effect a subdivision or consolidation of shares of Common Stock or the
payment of a stock dividend on Common Stock without receipt of consideration by
the Company, the number of shares of Common Stock with respect to which such
Option may thereafter be exercised (i) in the event of an increase in the
number of outstanding shares shall be proportionately increased, and the
purchase price per share shall be proportionately reduced, and (ii) in the
event of a reduction in the number of outstanding shares shall be
proportionately reduced, and the purchase price per share shall be
proportionately increased.  Any
fractional share resulting from such adjustment shall be rounded up to the next
whole share.

 

(c)           Recapitalizations
and Corporate Changes.  If
the Company recapitalizes, reclassifies its capital stock, or otherwise changes
its capital structure (a “recapitalization”), the number and class of shares of
Common Stock covered by an Option theretofore granted shall be adjusted so that
such Option shall thereafter cover the number and class of shares of stock and
securities to which the Participant would have been entitled pursuant to the
terms of the recapitalization if, immediately prior to the recapitalization,
the Participant had been the holder of record of the number of shares of Common
Stock then covered by such Option.  If
(i) the Company shall not be the surviving entity in any merger or
consolidation (or survives only as a subsidiary of an entity), (ii) the Company
sells, leases or exchanges or agrees to sell, lease or exchange all or
substantially all of its assets to any other person or entity, (iii) the
Company is to be dissolved and liquidated, (iv) any person or entity, including
a “group” as contemplated by Section 13(d)(3) of the 1934 Act, acquires or
gains ownership or control (including, without limitation, power to vote) of
more than 50% of the outstanding shares of the Company’s voting stock (based
upon voting power), or (v) as a result of or in connection with a contested
election of Directors, the persons who were Directors of the Company before
such election shall cease to constitute a majority of the Board (each such
event is referred to herein as a “Corporate Change”), no later than (x) 10 days
after the approval by the stockholders of the Company of such merger,
consolidation, reorganization, sale, lease or exchange of assets or dissolution
or such election of Directors or (y) 30 days after a Corporate Change of the
type described in clause (iv), the Committee, acting in its sole discretion
without the consent or approval of any Participant, shall effect one or more of
the following alternatives, which alternatives may vary among individual
Participants and which may vary among Options held by any individual
Participant:  (1) accelerate the time at
which Options then outstanding may be exercised so that such Options may be
exercised in full for a limited period of time on or before a specified date
(before or after such Corporate Change) fixed by the Committee, after which
specified date all unexercised Options and all rights of Participants
thereunder shall terminate, (2) require the mandatory surrender to the Company
by selected Participants of some or all of the outstanding Options held by such
Participants (irrespective of whether such Options are then exercisable under
the provisions of the Plan) as of a date, before or after such Corporate
Change, specified by the Committee, in which event the Committee shall
thereupon cancel such Options and cause the Company to pay to each Participant
an amount of cash per share equal to the excess, if any, of the amount
calculated in Subparagraph (d) below (the “Change of Control Value”) of the
shares subject to such Option over the exercise price(s) under such Options for
such shares, or (3) make such adjustments to Options then outstanding as the
Committee deems appropriate to reflect such Corporate Change (provided,
however, that the Committee may determine in its sole discretion that no
adjustment is necessary to Options then outstanding), including, without

 

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limitation,
adjusting an Option to provide that the number and class of shares of Common
Stock covered by such Option shall be adjusted so that such Option shall
thereafter cover securities of the surviving or acquiring corporation or other
property (including, without limitation, cash) as determined by the Committee
in its sole discretion.

 

(d)           Change of
Control Value.  For the
purposes of clause (2) in Subparagraph (c) above, the “Change of Control Value”
shall equal the amount determined in clause (i), (ii) or (iii), whichever is
applicable, as follows: (i) the per share price offered to stockholders of the
Company in any such merger, consolidation, sale of assets or dissolution
transaction, (ii) the per share price offered to stockholders of the Company in
any tender offer or exchange offer whereby a Corporate Change takes place, or
(iii) if such Corporate Change occurs other than pursuant to a tender or exchange
offer, the fair market value per share of the shares into which such Options
being surrendered are exercisable, as determined by the Committee as of the
date determined by the Committee to be the date of cancellation and surrender
of such Options.  In the event that the
consideration offered to stockholders of the Company in any transaction
described in this Subparagraph (d) or Subparagraph (c) above consists of
anything other than cash, the Committee shall determine the fair cash
equivalent of the portion of the consideration offered which is other than
cash.

 

(e)           Other Changes
in the Common Stock.  In
the event of changes in the outstanding Common Stock by reason of
recapitalizations, reorganizations, mergers, consolidations, combinations,
split-ups, split-offs, spin-offs, exchanges or other relevant changes in
capitalization or distributions to the holders of Common Stock occurring after
the date of the grant of any Award and not otherwise provided for by this
Paragraph IX, such Award and any agreement evidencing such Award shall be
subject to adjustment by the Committee at its discretion as to the number and
price of shares of Common Stock or other consideration subject to such
Award.  In the event of any such change
in the outstanding Common Stock or distribution to the holders of Common Stock,
or upon the occurrence of any other event described in this Paragraph IX, the
aggregate number of shares available under the Plan and the aggregate number of
shares that may be issued under the Plan through Incentive Stock Options shall
be appropriately adjusted to the extent, if any, determined by the Committee,
whose determination shall be conclusive.

 

(f)            Stockholder
Action.  Any adjustment
provided for in the above Subparagraphs shall be subject to any required
stockholder action.

 

(g)           No Adjustments
unless Otherwise Provided. 
Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
of shares of Common Stock subject to Awards theretofore granted or the purchase
price per share, if applicable.

 

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X.                                    AMENDMENT
AND TERMINATION OF THE PLAN

 

The Board in
its discretion may terminate the Plan at any time with respect to any shares of
Common Stock for which Awards have not theretofore been granted.  The Board shall have the right to alter or
amend the Plan or any part thereof from time to time; provided that no change
in the Plan may be made that would impair the rights of a Participant with
respect to an Award theretofore granted without the consent of the Participant.

 

XI.                                MISCELLANEOUS

 

(a)           No Right To An
Award.  Neither the
adoption of the Plan nor any action of the Board or of the Committee shall be
deemed to give an employee, Consultant, or Director any right to be granted an
Option, a right to a Restricted Stock Award, or any other rights hereunder
except as may be evidenced by an Option Agreement or a Restricted Stock
Agreement duly executed on behalf of the Company, and then only to the extent
and on the terms and conditions expressly set forth therein.  The Plan shall be unfunded.  The Company shall not be required to
establish any special or separate fund or to make any other segregation of
funds or assets to assure the performance of its obligations under any Award.

 

(b)           No
Employment/Membership Rights Conferred.  Nothing contained in the Plan shall (i)
confer upon any employee or Consultant any right with respect to continuation
of employment or of a consulting or advisory relationship with the Company or
any Affiliate or (ii) interfere in any way with the right of the Company or any
Affiliate to terminate his or her employment or consulting or advisory
relationship at any time.  Nothing
contained in the Plan shall confer upon any Director any right with respect to
continuation of membership on the Board.

 

(c)           Other Laws;
Withholding.  The Company
shall not be obligated to issue any Common Stock pursuant to any Award granted
under the Plan at any time when the shares covered by such Award have not been
registered under the Securities Act of 1933, as amended, and such other state
and federal laws, rules and regulations as the Company or the Committee deems
applicable and, in the opinion of legal counsel for the Company, there is no
exemption from the registration requirements of such laws, rules and
regulations available for the issuance and sale of such shares.  No fractional shares of Common Stock shall be
delivered, nor shall any cash in lieu of fractional shares be paid.  The Company shall have the right to deduct in
connection with all Awards any taxes required by law to be withheld and to require
any payments required to enable it to satisfy its withholding obligations.

 

(d)           No Restriction
on Corporate Action. 
Nothing contained in the Plan shall be construed to prevent the Company
or any Affiliate from taking any action which is deemed by the Company or such
Affiliate to be appropriate or in its best interest, whether or not such action
would have an adverse effect on the Plan or any Award made under the Plan.  No Participant, beneficiary or other person shall
have any claim against the Company or any Affiliate as a result of any such
action.

 

(e)           Restrictions on
Transfer.  An Award (other
than an Incentive Stock Option, which shall be subject to the transfer
restrictions set forth in Paragraph VII(c)) shall not be transferable otherwise
than (i) by will or the laws of descent and distribution, (ii) pursuant to a

 

10

 

qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder, or
(iii) with the consent of the Committee.

 

(f)            Governing Law.  The Plan shall be governed by, and construed in accordance with, the
laws of the State of Nevada, without regard to conflicts of law principles
thereof.

 

11Exhibit
10.1

 

DISTRIBUTION AND MARKETING AGREEMENT

This Agreement made as of
the 1st day of April, 2005 (the “Effective Date”), by and among Vistula
Communications Services, Inc, a Delaware corporation with its principal place
of business at 40 Portman Square, 4th Floor, London, United Kingdom W1H 6LT (“Vistula”)
and Telstra Europe Limited, a company registered in England with number 3830643
with its registered office at Telstra House, 21 Tabernacle Street, London EC2A
1AE (“Telstra”). Vistula and Telstra are sometimes
referred to individually as a “Party” and collectively as the “Parties.”

WHEREAS, Vistula has
acquired from NetYantra Inc., a Delaware corporation with its principal place
of business at Suite 102, #327 5200, NW 43rd Street, Gainesville, Florida
32606, United States of America (“NetYantra US”) and NetYantra India Pvt Ltd,
an Indian company with its principal office at 3rd Floor, Jaysynth
Centre, Plot No.6, Sector 24, Turbhe, Navi Mumbai - 400705, Mumbai, India (“NetYantra
India,” and collectively with NetYantra US, “NetYantra”) an exclusive right to
distribute the Products throughout the World excluding India;

WHEREAS, Telstra desires to
obtain from Vistula an exclusive license to market, distribute and support the
Products in the Territory; and

WHEREAS, each of the Parties
expects that during the term of this Agreement the other Party and its
Affiliates will not engage in any transaction with respect to the Products
which is materially detrimental to the interests of the other Party;

NOW, THEREFORE, in
consideration of the mutual promises and covenants contained herein, Vistula
and Telstra agree as follows:

1.             Definitions. 
For purposes of this Agreement, the following terms shall have the
meanings set forth below:

1.1           “Affiliate”  shall
mean, with respect to any person, any individual, corporation, partnership or
other business organization that directly or indirectly controls, is controlled
by, or is under common control with, such person.

1.2           “Commercial Launch” shall 
have the meaning set forth in Section 5.8 of this Agreement.

1.3           “End User License Agreement” shall have the meaning set
forth in Section 4.3 of this Agreement.

1.4           “Exclusivity” shall mean the exclusive right to market,
distribute and sublicense the Products in the Territory granted by Vistula to
Telstra hereunder.

1.5           “NetYantra Agreement” shall mean that Distribution and
Marketing Agreement, dated as August 11, 2004, by and between Vistula and
NetYantra.

1.6           “Products” shall mean the object code version of the
software and any other products described on Exhibit A to this
Agreement, together with all documentation provided 

 

with such software or other
products and any updates, modifications or enhancements to, and new versions
of, such software and other products.

1.7           “Service Customer” shall have the meaning set forth in
Section 3.5 of this Agreement.

1.8           “Service Level Agreement” shall be the service level
agreement to be entered into pursuant to Section 5.6.

1.9           “Services” shall have the meaning set forth in Section 3.5
of this Agreement.

1.10         “Stock Market” shall mean the Nasdaq Stock Exchange, a North
American stock market, the London Stock Exchange, a European Stock market, the
New Zealand Stock Exchange or the Australian Stock Exchange.

1.11         “Territory” shall mean the geographic area set forth on Exhibit
B to this Agreement.

1.12         “Telstra Customers” shall mean the individuals and entities
who license one or more Products from Telstra or its Affiliates or who purchase
Services from Telstra or an authorized reseller of Services.

2.             Appointment as Exclusive Distributor.

2.1           Appointment. 
Subject to the terms and conditions of this Agreement, Vistula hereby
appoints Telstra as its exclusive distributor of the Products in the Territory,
and Telstra hereby accepts such appointment and agrees to act, as a distributor
of the Products in the Territory during the term of this Agreement.

2.2           Restrictions on Future Distribution Agreements.
Vistula shall not grant any other individual or entity the right to market,
distribute or license the Products in the Territory and shall not itself
distribute or license any Products directly to any individual or entity located
in the Territory other than Telstra or Telstra’s Affiliates

2.3           Termination
of Exclusivity. At any time following the 5th anniversary of the Effective
Date Vistula may, upon six month’s prior written notice to Telstra, terminate
the Exclusivity of Telstra as Vistula’s distributor of the Products in the
Territory.;  should Telstra achieve the
sales targets agreed between them in accordance with this paragraph, Vistula
shall use its reasonable endeavors to agree with NetYantra to obtain the
necessary rights to continue to be able to grant Telstra a further period of
five years’ Exclusivity and such further appropriate revenue thresholds will be
negotiated in good faith at that time. 
In the event that the Exclusivity (as defined in the NetYantra Agreement
) of Vistula is terminated under the NetYantra Agreement, the Exclusivity of Telstra hereunder will automatically, and
without any further action by Vistula, terminate.  The parties agree to use best endeavors to
negotiate appropriate revenue thresholds by 1st January 2006
which if Telstra fail to achieve, Vistula may terminate the Exclusivity of
Telstra as Vistula’s distributor of the Products in the Territory upon three
month’s prior written notice, provided that Vistula shall provide Telstra with
reasonable opportunity to 

 

2

 

rectify the breach.  Notwithstanding any termination of the
Exclusivity hereunder for whatever reason, Vistula agrees that for a period of
two years following termination of such Exclusivity, it shall not offer to sell
Products or products similar to the Products to any Telstra Customers.

3.             Licenses.

3.1           Grant of Licenses. 
Subject to the terms and conditions of this Agreement, Vistula hereby
grants to Telstra, and Telstra hereby accepts, the following licenses
(collectively, the “Licenses”):

3.1.1  an exclusive license to market the Products
in the Territory and to distribute and sublicense the Products in the
Territory; and

3.1.2  an exclusive license to use the Products for
the following purposes:  (i)
demonstrating the operation and capabilities of the Products, (ii) training
Telstra’s marketing and support personnel, and (iii)  providing maintenance and support services to
Telstra Customers; and

3.2           Limitations. In no event shall Telstra establish or
maintain any sales or service office for the Products, engage in any
advertising or promotional activities relating to the Products, or market or
solicit orders for the Products by any means, including, without limitation, by
means of mail order catalogs or similar means, outside of the Territory,
without the consent of Vistula, such consent not to be unreasonably withheld or
delayed. Notwithstanding the preceding sentence, Telstra and its Affiliates may
sublicense (on a non-exclusive basis) an individual or entity with its
principal place of business within the Territory for distribution to sites or
use by employees, agents or customers of that individual or entity located
outside of the Territory.  Telstra shall
not exercise any rights and licenses with respect to the Products except those
specifically granted to Telstra under this Agreement.

3.3           Communication. 
The parties shall communicate regularly during the term of this
Agreement regarding the status of their joint efforts to market the Products,
and shall work together to develop and maintain an action plan relating to
their obligations under this Agreement. 
The parties shall meet at least quarterly to assess the results of their
activities under this Agreement and the status of their relationship.

3.4           European Software Directive.  If the provisions of the Council of European
Communities Directive of May 14, 1991 on the Legal Protection of Computer
Programs as implemented in applicable national legislation (the “Software
Directive”) apply to use of a Product by Telstra, its Affiliates or a Telstra
Customer, and if Telstra, any of its Affiliates or a Telstra Customer wishes to
obtain the information necessary to achieve interoperability of an
independently created computer program with a Product as permitted under
Article 6 of the Software Directive (“Interoperability Information”), then
Telstra will notify Vistula in writing, specifying the nature of the
Interoperability Information it needs and the purpose for which it will be
used. If Vistula reasonably determines that Telstra, its Affiliate or the
Telstra Customer is entitled to such Interoperability Information under Article
6, Vistula shall, at its option and subject to the NetYantra Agreement, (i)
provide such information to Telstra, its Affiliate or the 

 

3

 

Telstra Customer or (ii)
authorize Telstra, its Affiliate or the Telstra Customer to reverse engineer
the Product, within the limits prescribed by Article 6, solely to the extent
indispensable to obtain such Interoperability Information.  If Telstra elects clause (i), subject to the
NetYantra Agreement, Vistula shall provide all information and assistance
reasonably requested by Telstra to enable Telstra to perform clause (i), and
Vistula may charge Telstra a reasonable fee, determined in Vistula’s reasonable
discretion, for making available the requested Interoperability Information,
unless such a fee is prohibited under Article 6.

3.5           Service Customers. 
If Telstra licenses a copy of a Product from Vistula, Telstra may, in
lieu of sublicensing such Telstra Product to a Telstra Customer, elect to use
the Product for the sole purpose of providing to one or more Telstra
Customers  (each, a “Service Customer”)
the services that the Product was designed and intended to support and/or
provide (the “Services”).    Telstra
covenants and agrees that any use of a Product to provide Services shall be in
compliance with all of the terms and conditions of this Agreement and the type
of license purchased.  Without limiting
the generality of the foregoing, Telstra covenants and agrees that the Product,
wherever situated and operating, shall be used solely to provide Services to
the Service Customers and not to provide any other services to any other person
or entity.  In exchange for the right to
provide the Services, Telstra agrees to pay Vistula the applicable license fee
for any Product licensed for the purpose of providing the Services, as provided
in Section 6.2.

4.             Covenants and Duties of Telstra.

4.1           Promotion of Products.  Telstra will use reasonable efforts to
promote and maximize the distribution and use of the Products in the
Territory.  Notwithstanding anything to
the contrary in this Agreement, Telstra shall be permitted to market,
distribute and sublicense the Products in the Territory under its own brand
without reference to Vistula or NetYantra.

4.2           Sales Approach.

4.2.1  Telstra will be responsible for making the
initial presentation of the Products to interested individuals and entities,
and will act as the primary commercial contact with existing and potential
Telstra Customers.  Notwithstanding the
foregoing, Vistula acknowledges that each engagement with a Telstra Customer
may require assistance from itself and, subject to the terms of the NetYantra
Agreement, NetYantra in accordance with Section 5 hereof, and accordingly the
parties shall cooperate to provide requirements analysis, support and expertise
during marketing, implementation and training for the Products. The parties
shall regularly consult with each other and keep each other informed during the
sales, tendering and proposal process for any Telstra Customer in relation to
technical and other relevant matters.

4.2.2  Unless otherwise agreed in writing, all costs
incurred in connection with the preparation and submission of proposals,
negotiations of a contract and all other costs incurred before the execution of
a contract with a Telstra Customer shall be borne by Telstra. In no event shall
either party purport to, or represent itself as having the authority to make
commitments to any customer or prospective customer on behalf of the other party,
except as expressly set forth in this Agreement.

 

4

 

4.2.3  Telstra agrees that during
the term of this Agreement, except with the written consent of Vistula or as
provided in agreements between Telstra and third parties existing on the date
hereof, it will not market, distribute or license any telecommunication
platform or services in the Territory that are competitive with the Products or
Services (“Competing Products or Services”) or work with any other company with
respect to Competing Products or Services in the Territory, provided that if
the Vistula fails to achieve the service levels as set out in the Service Level
Agreement, Telstra may market, distribute or license Competing Products or
Services.  Vistula hereby confirms that
it will provide its written consent to Telstra marketing, distributing or
licensing Competitive Products or Services where Telstra has been instructed to
offer such Competitive Products or Services by Telstra Corporation Limited as
part of a world-wide arrangement entered into by Telstra Corporation Limited.

4.3           End User License Agreement.  Where Telstra sublicenses the Products to a
third party reseller of the Services or an end user (other than a Service
Customer), Telstra shall obtain from the such reseller or end user binding
acceptance by electronic or other means of, or a fully executed written license
agreement that contains, at a minimum the terms and conditions set forth on Exhibit
C to this Agreement (“End User License Agreement”).  Notwithstanding anything to the contrary in
this Agreement, Vistula agrees that a reseller of the Services or end user may
permit access to and use of the Products by such of their employees, agents and
customers in the ordinary course of their business.

4.4           Installation, Training and Support.  Telstra shall provide installation and
training services with respect to the Products for the Telstra Customers.
Telstra may, at is option, subcontract Vistula to provide all or any part of
these services to a Telstra Customer. 
Vistula may accept such a subcontract at its option based on
availability of resources to carry out the said subcontract. In the event that
Telstra subcontracts these services to Vistula and Vistula agrees to provide
these services, the scope and cost of such services shall be set forth in a
statement of work agreed by the parties hereto based on the requirements of the
Telstra Customer.  Telstra will provide
Tier 1 support to Telstra Customers.

4.5           Sales Leads. 
Vistula shall communicate to Telstra information regarding all sales and
sublicensing opportunities in the Territory with respect to the Products
(including the name of the prospective customer and applicable contact details)
that may become known to Vistula or any of its Affiliates.

4.6           Developments. 
The parties acknowledge that development of software, written works,
data, materials, inventions, conceptions or improvements (“New Materials”) may
be required to address Telstra and/or a Telstra Customer’s specific requirements
in connection with implementation of the Products.  In such event, the parties will, in advance
of the development of any New Materials, use reasonable endeavors to mutually
agree and execute a Statement of Work setting forth the New Materials to be
developed, the respective roles and responsibilities of the parties relating to
the development, and the ownership of the New Materials and all intellectual
property rights therein.  On Telstra
providing a specification to Vistula, Vistula shall use reasonable endeavors to
respond to such request with a costed proposal within 14 working days.  This response shall form the basis of the
Statement of Work referred to above which shall include agreed pricing and
timescales for the delivery of the New Materials. It is noted that 

 

5

 

Telstra intends to develop a
Service offering which will utilize the Products.  The intellectual property rights in such
Service offering (except for any intellectual property rights in or to the
Products which shall remain the property of Vistula and its licensors) shall be
the sole property of Telstra.

5.             Covenants and Duties of Vistula.

5.1           Provision of Marketing Materials. Vistula will provide to Telstra, at no
cost to Telstra, electronic copies of advertising and marketing materials
generally released by Vistula and NetYantra relating to the Products (“Marketing
Materials”) for distribution and use in the Territory. Telstra may make and
distribute a reasonable number of copies of the then-current versions of any
Marketing Materials delivered to Telstra by Vistula, provided that Telstra
shall not use or distribute any Marketing Materials identified as rescinded by
Vistula. Telstra may modify, reformat or create its own marketing materials related
to the Products, using Vistula marketing materials and information. Telstra may
include references to the Products and to its role as distributor on its
website..

5.2           Provision of Products.  Vistula shall, or shall cause NetYantra to,
install a copy of the Products on the server of Telstra in the event that
Telstra intends to provide Services to Service Customers or on the server of a
Telstra Customer in the event that Telstra elects to sublicense the Products to
such Telstra Customer in accordance with this Agreement.

5.3           New Versions. Vistula and NetYantra may from
time to time and their sole discretion release a new version (the “New Version”)
of any Product or Products, which new version shall supersede the prior version
(a “Superseded Version”). Upon release of the New Version, Vistula shall
promptly provide and install, or cause NetYantra to provide and install, the
New Version on a server at Telstra’s premises and after a period of 12 months
following the issue of the New Version, Telstra may not market or distribute
the Superseded Version without the prior written approval of Vistula.  A “New Version” shall not be a New Version
until Telstra has had full opportunity to test the New Version, and has
confirmed in writing to Vistula that such new version is accepted as a New
Version.  Vistula will continue to
support Superseded Versions for a minimum period of 12 months following Telstra’s
acceptance of the New Version.

5.4           Training. 
Vistula shall provide or procure that NetYantra shall provide free of
charge a two-day training seminar to Telstra personnel on the operation and
capabilities of the Products at Telstra’s offices.  Vistula shall further provide and shall
procure that NetYantra shall provide Telstra with such additional information
and support as may be reasonably requested by Telstra in further understanding
the operation and capabilities of the Products excluding any information
regarding the source code, specific algorithms or other information forming the
intellectual property of Vistula or NetYantra. Additionally, Vistula shall
provide or procure that NetYantra shall provide free of charge, a one-day
training seminar to Telstra personnel at Telstra’s offices for each significant
enhancement release for, or new versions of, the Products. Training may also be
provided at other locations by mutual agreement of the parties.  For the avoidance of doubt, Telstra shall be
responsible for the travel, accommodation and other costs relating to its
personnel being trained.

 

6

 

5.5           Marketing Support. 
At the request of Telstra, Vistula will provide reasonable assistance to
support Telstra’s marketing efforts to potential customers to the extent that
Vistula has available adequate personnel and other necessary resources to
provide such assistance.  Without
limiting the generality of the foregoing, if requested by Telstra, Vistula
shall (i) attend sales calls and/or presentations with Telstra as reasonably
requested by Telstra giving not less than two (2) days’ written notice and
agreed to by Vistula in connection with the presentation of Products to
potential Telstra Customers; (ii) provide reasonable support and aid in any
response to a request for proposal issued by a potential Telstra Customer to
which a response is prepared by Telstra involving one or more Products; and
(iii) provide reasonable support and assistance with any field trial of one or
more Products with any potential Telstra Customer.  Vistula shall keep Telstra reasonably
informed of the status of significant product enhancements or new products.

5.6           Technical
Support and Assistance.  Vistula will provide Telstra with
technical support and assistance including remote diagnostics, product advice
and upgrades.  The provision of technical
services are more particularly set out in Exhibit D and will be subject to the
terms of a more detailed service level agreement to be agreed between the Parties by 1st
January 2006 (the “Service Level Agreement”), such service level agreement to
include timescales for Vistula to respond, restore and resolve critical,
urgent, functional non-urgent and cosmetic non-urgent faults and shall provide
for service level rebates to be provided to Telstra in the event that there is
a failure by Vistula to comply with such timescales.  The Service Level Agreement shall also
include Telstra’s rights to terminate its obligation not to promote, market or
distribute Competing Products or Services as set out in Section 4.2.3, in the
event of Vistula’s failure to achieve its obligations under the Service Level
Agreement.

5.7           Product Development Support. Vistula will, at its
sole expense, provide such reasonable assistance to Telstra to assist Telstra
in developing its Service offering and integrated VoIP Product and portal, incorporating
the Products.

5.8           Initial Product Development.  Vistula will, at its sole expense, ensure that
the Product is working to Telstra’s specification and has the working features
and functionality expected from a product of this type, the detailed specification
to be agreed between the Parties. 
Telstra will provide Vistula details of the detailed specification
required in order for initial product development to be completed and
Commercial Launch to take place.  For the
purposes of this Agreement, “Commercial Launch” shall occur on the earlier
of:  (i) the date for such Commercial
Launch as agreed between the parties, or (ii) Telstra entering into a contract
for the supply of Services to a Telstra Customer which requires the Telstra
Customer to pay for the Services.

6.             Orders and Payments.

6.1           Prices. 
Telstra shall have the sole right to establish prices for its
distribution of the Products to Telstra Customers.

6.2           Payments. 
Telstra shall pay Vistula the sum of £1 per month for each individual
user of the Services or Products during such month, pro-rated in the event that
a user is only a

 

7

user for part of a
month.  It is noted that there may be a
number of users within a Telstra Customer. Telstra may deduct from the amount
payable to Vistula that portion of any allowances, chargebacks, credits,
refunds and other adjustments actually credited to Telstra Customers solely to
the extent that such allowance, chargeback, credit, refund or other adjustment relates
to Service errors, failures or other performance issues in connection with or
arising from the Products equal to the fraction, the numerator of which is
£1.00 and the denominator of which is the monthly per user fee charged by
Telstra to the relevant Telstra Customer for the Services.  The fee shall not be payable in respect of
any alpha or beta trial Telstra Customers or for Telstra’s own internal use in
its offices.  Fees shall only be due
following Commercial Launch of Telstra’s Service offering incorporating one or
more of the Products following satisfactory completion by Vistula of the
initial product development in accordance with Section 5.8.

6.3           Payment Terms. 
Within 15 days of the end of each month following the execution of this
Agreement, Telstra shall provide Vistula with a statement showing the number of
users of the Services and Products in such month.  On  the
provision by Vistula to Telstra of an invoice calculated based on the statement
provided by Telstra, Telstra shall pay such invoice within 30 days’ of receipt
of the invoice.

6.4           VAT.  VAT may
be charged as appropriate on invoices submitted by Vistula.

6.5           Delivery of Products.  Upon request by Telstra, Vistula shall
promptly (but no later than two (2) business days following receipt of the
request) provide any necessary “key,” pass code or other permission to Telstra
or its Affiliates to enable Telstra or a Telstra Customer to use Products which
have been installed on the server of Telstra or the Telstra Customer in
accordance with this Agreement.

6.6           Freight; Risk of Loss.  All Products ordered by Telstra from Vistula
that are required to be physically delivered to Vistula, if any, shall be
shipped by Vistula to the Telstra facility requested by Telstra.  Telstra shall pay all shipping charges in
connection with the delivery of the Products to Telstra, including all freight
charges, import or export fees, insurance premiums and costs, and all taxes and
duties related to any shipments.  All risk
of loss or damage for all Products shipped to Telstra from Vistula shall pass
to Telstra upon delivery by Vistula to Telstra or to Telstra’s agent for
delivery, whichever first occurs.

6.7           Payment.  All
payments from Telstra to Vistula shall be made in United Kingdom sterling
(£).  Payment shall be by wire transfer
to Vistula’s account at a commercial bank designated by Vistula.

7.             Records, Right to Audit.

7.1           Telstra Reports. 
Telstra shall report to Vistula the following information:

(a)           within ten (10) days after the end of each calendar quarter,
a list of all Products licensed directly or Services provided by Telstra to
Telstra Customers during the preceding calendar quarter and all Products
distributed or Services provided by Affiliates of Telstra to Telstra Customers
during such calendar quarter; and

 

8

 

(b)           such other information relating to the marketing,
distribution and/or provision of the Products and Services as Vistula shall
reasonably request from time to time.

7.2           Business Records; Right to Audit and Copy.  During the term of this Agreement and for a
period of two (2) years thereafter, Telstra shall maintain accurate records
relating to the distribution of Products and provision of Services to Telstra
Customers in the Territory and to Telstra’s performance of its obligations
under this Agreement (“Business Records”). 
The Business Records shall include, without limitation, the identity,
address, contact and, if known to Telstra, hardware and operating environments
of each Telstra Customer, the type of Product and date of distribution for each
Product, the type of Services and dates of use of the Services, the number of
individual licensed users of the Product and Services at the Telstra Customer,
the dates of Product installation (if applicable), a copy of each End User
License Agreement and information about any maintenance and support services
purchased by the Telstra Customer. 
During the term of this Agreement and for a period of two (2) years thereafter,
Vistula or its designee shall have the right, at its own expense and on giving
not less than twenty (20) working days’ notice from time to time have access to
audit the Business Records.

8.             Proprietary Rights and Confidentiality.

8.1           Ownership of Products.  Vistula and its licensors shall retain all
right, title and interest in the Products throughout the world, including
without limitation, patent, copyright, trademark and trade secret rights.  Except as expressly set forth in Section 3 of
this Agreement, neither this Agreement, nor any license of Products hereunder
shall be construed as granting to Telstra or any other party any license or
other right in or to any patent, copyright, trademark, trade secret or other
proprietary right of Vistula or its licensors. 
Telstra shall not take any actions inconsistent with this Section 8.1.

8.2           No Decompiling or
Reverse Engineering. Except as
required or permitted by the Software Directive, Telstra shall not (and
shall cause its Affiliates not to):

8.2.1  make error corrections to or otherwise modify
or adapt the software or create derivative works based upon the Products, or
permit third parties to create derivative works of the Products;

8.2.2  decompile, decrypt, reverse engineer, or
otherwise reduce the Products to human readable form or to gain access to trade
secrets and or confidential information in the Products; or

8.2.3  reproduce, deactivate, modify or bypass the
security devices, including any software or hardware key supplied with respect
to use of the Products.

8.3           Confidential Information.

8.3.1  “Confidential Information” shall mean any
information, in whatever form, received by one party hereto (the “receiving
party”) from the other party hereto (the “disclosing party”) that is identified
as being proprietary or confidential to the disclosing party or which might
permit the disclosing party or its customers to obtain a competitive advantage
over those 

 

9

 

who
do not have access to the information, provided, however, that Confidential
Information shall not include information which (a) is or becomes a part of the
public domain through no act or omission of the receiving party, (b) was in the
receiving party’s lawful possession prior to the disclosure by the disclosing
party and had not been obtained by the receiving party either directly or
indirectly from the disclosing party or unlawfully from any third party, (c) is
lawfully disclosed to the receiving party by a third party without restriction
on disclosure, or (d) is independently developed by the receiving party.

8.3.2  The receiving party hereby agrees that it
will hold all Confidential Information in strict confidence and will use such
Confidential Information only in accordance with the terms of this Agreement.
The receiving party shall limit the use of, and access to, the Confidential
Information to its employees or agents whose use of or access to the
Confidential Information is necessary to carry out the receiving party’s
obligations under this Agreement. The receiving party shall, by all appropriate
means, prevent the unauthorized disclosure, publication, display or use of
Confidential Information and shall, in any event, take at least the same
precautions to protect the confidentiality of the Confidential Information as
it takes to protect its own confidential information.

8.3.3  Telstra, its Affiliates and Telstra Customers
shall not alter or remove any trademark or copyright, restricted rights,
limited rights, proprietary rights or confidentiality notice included in or
affixed to the Products, any Marketing Materials or any Confidential
Information and shall reproduce all such notices on any copies of the Products,
Marketing Materials or Confidential Information made by Telstra in accordance
with this Agreement.

8.4           Source Code Escrow. 
Promptly (but no later than thirty (30) days) following the date hereof,
the Parties and NetYantra will execute a Source Code Escrow Agreement (“the
Escrow Agreement”) with an escrow agent named therein (the “Escrow Agent”), and
Vistula will procure that NetYantra will deposit with the Escrow Agent the
Products in source code form, including related information (e.g. keys, etc.)
which is reasonably required by Telstra and its Affiliates to maintain and
support the Products (such source code and related information, the “Deposit”).
The Escrow Agreement will be executed in accordance with this Section 8.4 and
will not contain any terms or conditions contrary to or in conflict with this
Section 8.4.

9.             Term and Termination.

9.1           Term.  This
Agreement shall become effective upon the execution hereof by Vistula and
Telstra and shall continue for a period of five (5) years from the Effective
Date, unless earlier terminated in accordance with this Section 9.  This Agreement shall automatically renew for additional
two-year terms unless Telstra notifies the other in writing of its desire not
to renew this Agreement at least ninety (90) days prior to the end of the
then-current term.  Vistula shall use its
all reasonable endeavors to ensure that the NetYantra Agreement remains in
place in order that Vistula is able to continue to grant the license hereunder
to Telstra and to allow Telstra to maintain Exclusivity.

9.2           Termination for Default.  Either party may, at its option, terminate
this Agreement effective upon written notice to the other party if the other
party has breached any provision of 

 

10

this Agreement and has
failed to cure the breach within thirty (30) days of notice of the breach,
unless such breach is a breach of Section 8.2 hereof, in which case termination
shall be immediate if the breach can not be cured.

9.3           Termination for Insolvency.  Either party may terminate this Agreement
upon written notice to the other party if the other party is liquidated or
dissolved, or becomes insolvent, or suffers a receiver, administrator or
trustee to be appointed for it or any of its undertakings or assets, or is
deemed to be unable to pay its debts or shall cease to carry on business, or
makes a general assignment for the benefit of its creditors or institutes or
has instituted against it any proceeding under any law relating to bankruptcy
or insolvency or the reorganization or relief of debtors.

9.4           Termination of NetYantra Agreement.  In the event of the expiration or termination
of the NetYantra Agreement, Vistula shall terminate this Agreement by written
notice to Telstra.  In the event of such
termination, the parties will meet and mutually agree upon a future course of
action to mitigate the consequences of such termination including with respect
to the support of Telstra Customers. 
Vistula shall use its best endeavors to procure within 90 days of the
date hereof that Vistula or NetYantra shall confirm by way of deed to Telstra
that should the NetYantra Agreement expire or terminate, NetYantra shall enter
into an Agreement with Telstra on the terms of this Agreement, mutatis
mutandis, save where the NetYantra Agreement is terminated by NetYantra as a
result of a breach of the terms of that Agreement caused directly by the
actions or omissions of Telstra.   Other
than where the NetYantra Agreement is terminated by NetYantra as a result of a
breach of the terms of that Agreement caused directly by the actions or
omissions of Telstra, any additional costs incurred by Telstra to mitigate the
consequences of such termination shall be borne by Vistula.

9.5           Effect of Termination.  Subject to Section 9.7, upon termination of
this Agreement for any reason, or upon expiration of this Agreement without
renewal, Telstra shall (and Telstra shall cause its Affiliates to) cease (i)
marketing, distributing and licensing the Products or providing the Services,
and (ii) using the Trademarks and any Marketing Materials.  Immediately upon any termination of this
Agreement, Telstra shall pay to Vistula all amounts then owed to Vistula.  For the avoidance of doubt, following
termination of the Agreement, Vistula will remain entitled to receive, and
Telstra shall pay to Vistula, all of the fees under Section 6 with respect to
individual users at Telstra Customers so long as the sublicense or contract
relating to the Services, as applicable, with such Telstra Customer remains in
effect.

9.6           Effect of Termination on Telstra Customers.  Any termination of this Agreement shall not
affect (a) the sublicenses granted by Telstra to its Affiliates solely to the
extent such sublicenses are required by Telstra Affiliates to support existing
Telstra Customers or (b) the sublicenses granted by Telstra or its Affiliates
to Telstra Customers, as long as such Affiliates or Telstra Customers are not
in breach of their respective sublicense agreement or End User License
Agreement.

9.7           Return of Promotional Material and Confidential
Information.  Within thirty (30) days
after expiration or termination of this Agreement, (i) Telstra shall promptly
submit to Vistula a report including the information described in Section 7.1
of this Agreement for the 

 

11

period from the date of the
last such report through the date of expiration or termination, (ii) Telstra
and its Affiliates shall promptly return to Vistula all copies of any
Confidential Information and Marketing Materials of Vistula and Vistula shall
promptly return to Telstra all copies of any Confidential Information of
Telstra, and (iii) to the extent any such Confidential Information or Marketing
Material cannot be returned by either party, such party shall erase or destroy
all copies of such Confidential Information and Marketing Materials under its
control, including all copies that are fixed or running in machines controlled
by it.

9.8           Survival of Terms. 
The provisions of Sections 1, 7.2, 8, 9, 10.2, 11, 12 and 13 and any
payment obligations under Section 6 shall survive any termination of this
Agreement.

10.           Warranties and Disclaimer.

10.1         Warranties. 
Vistula represents and warrants to Telstra that:

10.1.1  Rights.  Vistula has the right to enter into this
Agreement and grant to Telstra the rights granted herein.

10.1.2  Limited Warranty.  For a period of one hundred and eighty (180)
days from the date of installation by a Telstra Customer the Products will
perform substantially in accordance with the functional specifications set
forth in the documentation provided with such Products.

10.1.3  Exceptions.  Vistula’s limited warranty set forth in
Section 10.1.2 above shall not apply if breach of the warranty has resulted
from (i) accident, corruption, misuse or neglect of the Products not arising
from the act or omission of Vistula; (ii) acts or omissions by someone other
than Vistula; (iii) combination of the Products with products, material or
software not provided by Vistula or not intended for combination with the
Products; or (iv) failure by the Telstra Customer to incorporate all updates to
the Products provided by Vistula.

10.2         Disclaimer of Warranties.

10.2.1  Except for the express warranties set forth
in Section 10.1 above, Vistula makes no warranty to Telstra regarding the
Products or any services provided by Vistula hereunder.

10.2.2  TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, THE EXPRESS WARRANTIES SET FORTH IN SECTION 10.1 ABOVE ARE THE ONLY
WARRANTIES MADE BY VISTULA WITH RESPECT TO THE PRODUCTS AND SERVICES PROVIDED
BY VISTULA.  VISTULA MAKES NO OTHER
WARRANTIES, EXPRESS, IMPLIED OR ARISING BY CUSTOM OR TRADE USAGE, AND,
SPECIFICALLY, MAKES NO WARRANTY OF NONINFRINGEMENT, MERCHANTABILITY,
SATISFACTORY QUALITY OR FITNESS FOR ANY PARTICULAR PURPOSE.

 

12

11.           Limitation of Liability.

11.1         Limitation. IN NO EVENT SHALL EITHER PARTY OR ITS
LICENSORS BE LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES,
INCLUDING, WITHOUT LIMITATION, ANY DAMAGES RESULTING FROM LOSS OF DATA, LOSS OF
PROFITS, LOSS OF BUSINESS OR LOSS OF GOODWILL ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR THE PERFORMANCE OF THE PRODUCTS, WHETHER OR NOT SUCH
PARTY OR ITS LICENSORS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.  THE LIABILITY OF EITHER PARTY
HEREUNDER TO THE OTHER (OTHER THAN IN RESPECT OF UNPAID AMOUNTS DUE FROM ONE
PARTY TO THE OTHER) SHALL NOT EXCEED £1,000,000 FOR ANY INDIVIDUAL EVENT OR
£2,000,000 IN ANY PERIOD OF 12 MONTHS.

11.2         Telstra’s Representations.  In no event shall Telstra make any
representations to existing or potential Telstra Customers about the Products
that conflict in any way with the Marketing Materials provided by Vistula or
Telstra’s knowledge of the Products.

12.           Indemnification.

12.1         Infringement Indemnity.  Vistula shall indemnify, defend, and hold
Telstra and its Affiliates harmless from and against any claims, demands,
liabilities, losses, damages, judgments or settlements, including all
reasonable costs and expenses related thereto, including attorney’s fees,
directly or indirectly resulting from any claimed infringement or violation of
any copyright, patent, or other intellectual property right by the Products,
any part thereof or the use of the Products. Vistula shall have no liability
under this Section 12.1 with respect to any claims, demands, liabilities,
losses, damages, judgments or settlements resulting from (a) infringement by a
combination of any Product with other products or services not furnished by
Vistula hereunder; or (b) infringement solely resulting from any modification
or addition to any Product by any person or entity other than Vistula. Vistula
shall have no liability under this Section 12.1 unless Telstra (a) promptly
notifies Vistula in writing of the claim, action or proceeding, (b) gives
Vistula full authority and reasonable information and assistance to defend such
claim, action or proceeding, and (c) gives Vistula sole control of the defense
and settlement of such claim, action or proceeding and all negotiations
relating thereto.  If a Product or any
part thereof becomes, or in Vistula’s reasonable opinion is likely to become,
the subject of a valid claim of infringement or the like under any patent,
copyright or trade secret law, Vistula shall have the right, at its option and
expense, either to obtain a license permitting the continued use of the Product
or such part, to replace or modify it so that it becomes non-infringing,
or to terminate the license granted herein to distribute the Product.  Vistula shall have no liability hereunder for
any costs incurred or settlement entered into without its prior written
consent, such consent not to be unreasonably withheld.

12.2         Limitation. 
SECTION 12.1 SETS FORTH THE ENTIRE LIABILITY OF VISTULA, AND THE
EXCLUSIVE REMEDY OF TELSTRA AND ITS AFFILIATES, WITH RESPECT TO ANY CLAIM
OF  PATENT, COPYRIGHT OR TRADE SECRET
INFRINGEMENT BY THE PRODUCTS, ANY PART THEREOF OR THE USE THEREOF, AND ARE IN
LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, AND

 

 

13

INDEMNITIES WITH RESPECT TO
PATENT, COPYRIGHT OR TRADE SECRET INFRINGEMENT BY THE PRODUCTS, ANY PART
THEREOF OR THE USE THEREOF.

12.3         Indemnification. 
Telstra shall indemnify and hold harmless Vistula from and against any
and all claims, demands, liabilities, losses, costs and expenses (including
reasonable attorneys fees) of any kind whatsoever suffered or incurred by
Vistula as a result of a failure by Telstra to comply with applicable law with
respect to the marketing or distribution of the Products.

13.           General Provisions.

13.1         Entire Agreement. 
This Agreement, including all Exhibits attached hereto, sets forth the
entire agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all oral and written agreements and
understandings relating thereto.  As between
the Parties, in the event of any conflict between the terms of this Agreement
and the terms of the Escrow Agreement or any sublicense agreement or end user
license agreement with respect to the Products and the provisions of this
Agreement, the terms of this Agreement shall prevail.

13.2         Modification/Waiver. 
No waiver, alteration, modification, or cancellation of any of the
provisions of this Agreement shall be binding unless made in writing and signed
by each of the parties hereto.  Either
Party’s failure at any time or times to require performance of any provision
hereof shall in no manner affect its right at a later time to enforce such
provision.  No remedy referred to in this
Agreement is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to herein or otherwise available at law,
in equity or otherwise.

13.3         Assignment. 
This Agreement shall be binding upon, and inure to the benefit of, the
Parties hereto and their respective legal representatives, successors and
permitted assigns.  Neither Party may
assign any of its rights or delegate any of its duties hereunder, in whole or
in part, to any third party, without the prior written consent of the other,
such consent not to be unreasonably withheld or delayed; provided, however,
that either Party may assign its rights under this Agreement to an Affiliate
provided that such Affiliate agrees in writing to be bound by all the terms and
conditions of this Agreement.

13.4         Relationship of the Parties.  The relationship between Vistula and Telstra
shall be that of independent contractors. 
Nothing contained in this Agreement shall be construed to create a
partnership, joint venture or agency relationship between the parties, and,
notwithstanding anything else herein, neither Party shall have the right to
incur (and will not attempt to incur) any obligation or liability on behalf of
the other Party.

13.5         No Solicitation. Each of the Parties agrees that
during the term of the Agreement and for one year after any expiration or
termination of this Agreement, they will not, directly or indirectly, recruit,
solicit or induce (or attempt to do any of the foregoing), any specific
employee or employees of the other party to terminate such employee’s
employment with, or otherwise cease their relationship with, the other Party
without the prior written consent of such other Party.

 

14

13.6         Severability. 
If any of the provisions of this Agreement are determined to be invalid,
illegal, or unenforceable by a court of competent jurisdiction, such provisions
shall be severed from the Agreement, and the remaining provisions shall remain
in full force and effect; provided, however, that with respect to any material
provision so severed, the parties shall negotiate in good faith to achieve the
original intent of such provision.

13.7         Applicable Law. 
This Agreement shall be governed by and construed and enforced in
accordance with, the laws of England and Wales, without regard to the United
Nations Convention on Contracts for the International Sales of Goods , and this
Agreement shall be subject to the non-exclusive jurisdiction of the Courts of
England and Wales.

13.8         Notices.  Any
notices required or permitted under this Agreement shall be in English and in
writing and shall be sufficiently given if (i) personally delivered, (ii) sent
by first class post or (iii) sent by facsimile. 
Any such notice shall be addressed to the party entitled or required to
receive such notice at the addresses specified below or at such other address
as either party may specify from time to time by written notice in accordance
herewith.  Any notices given hereunder
shall be effective as of the earliest of (i) actual receipt or (ii) twenty-four
hours after transmission if sent by facsimile, or two days after posting.

If to Vistula:

40
Portman Square, 4th Floor

London

United Kingdom W1H 6LT

Attn:  President

Fax:  020 7487 4001

With
a copy to:

Foley
Hoag LLP

155 Seaport Boulevard

Boston, Massachusetts  02210

United States of America

Attn:  Paul Bork, Esq.

Fax:  +1 (617) 832-7000

If
to Telstra

Telstra
House

21 Tabernacle Street

London

United Kingdom EC2A 1AE

Attn:  General Counsel

Fax:  020 7965 8801

13.9         Force Majeure. 
Neither party hereto shall be liable for any delays in the performance
of any of its obligations hereunder, except for the payment obligations of
Telstra 

 

15

under Section 6.2, due to
causes beyond its reasonable control, including, but not limited to, fire,
strike, war, riots, acts of any civil or military authority, acts of God,
judicial action, unavailability or shortages of labor, materials or equipment,
failure or delay in delivery by suppliers or delays in transportation.

13.10       Headings. 
Headings used in this Agreement are solely for the convenience of the
parties and do not constitute a part of this Agreement.

13.11       Publicity. 
Telstra reserves the right to disclose the existence of a contractual
relationship between Telstra and Vistula. 
Disclosure will include Telstra-issued press releases which will
generally include, but may not be limited to, a brief description of services
provided or products used and the agreement date. Disclosure may also include,
but not be limited to, the following Telstra activities:  (i) client lists, (ii) case studies, (iii)
presentations and (iv) Web site inclusion.

13.12       Stock Exchange Announcements.  Both Parties (and any Affiliates) shall be
entitled to make any announcements and disclosures required by any government
authority or regulatory agency (including, without limitation, the United
States Securities and Exchange Commission) or any Stock Market on which their
shares are listed or are in the process of being listed.  The other party shall be given the opportunity
to comment on any such announcement or disclosure, and any comments made shall
be taken into consideration by the announcing/disclosing party, acting
reasonably provided that the comments are provided on a timely basis so as to
permit timely announcement or disclosure.

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement through their
duly authorized representatives as of the date first written above.

 

 

 

 

16

	
  Vistula Communications
  Services, Inc.

  	
   

  	
  Telstra Europe Limited

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Rupert Galliers-Pratt

  	
   

  	
  By:

  	
   

  	
  /s/ David Thorn

  
	
  Name:

  	
  Rupert Galliers-Pratt

  	
   

  	
  Name:

  	
  David Thorn

  
	
  Title:

  	
  President & CEO

  	
   

  	
  Title:

  	
  CEO

  

 

 

17

 

EXHIBIT A

Description of Products

The NY-CubeTM (also known as
the V-Cube) IP-PBX internet telephony software products and all configurations,
modifications, enhancements, upgrades, releases and new versions thereof for
direct or indirect use by Tier 1 carriers, telecommunications equipment
manufacturers, internet service providers, large corporations, SMEs and other
business entities and individual retail customers.

Details of the functionality
of the Products are set out in the Functional Specification.

The NY-CubeTM IP-PBX internet
telephony software products were originally developed by NetYantra.

For the avoidance of doubt,
there shall be no requirement on Telstra to identify the developer or
distributor of the Products.

 

18

EXHIBIT B

Territory

United Kingdom of Great Britain and Northern Ireland

Republic of Ireland

Jersey

Guernsey

Isle of Man

 

 

19

 

EXHIBIT C

End User License Agreement Minimum Terms

Any End User License
Agreement required to be used by Telstra or its Affiliates with Telstra
Customers or resellers shall include at a minimum terms and conditions that
cover the following points:

1.  If the Telstra Customer or reseller desires
to use the Products in connection with equipment or operating systems other
than those on which the Products are initially installed, the Telstra Customer
or reseller will notify Telstra.  The
Telstra Customer or reseller understands that use of different equipment or
operating systems may require the purchase of additional installation services
and that not all equipment or operating systems are supported.

2.  The license granted to a Telstra Customer or
reseller shall be a nonexclusive, nontransferable license.

3.  The Telstra Customer or reseller may not copy
the Products except for backup or archival purposes and Telstra Customer or the
reseller may not copy the documentation accompanying the Products without
Telstra’s prior written consent.

4.  The Telstra Customer or reseller may not
sell, license, sublicense, lease, time-share, rent or otherwise make the
Products or the license granted by the End User License Agreement available to
any third party except to the extent permitted by the End User License
Agreement.  The Telstra Customer or
reseller will be permitted to enable its employees, agents and customers to
access and use the Products in the ordinary course of the Telstra Customer or
reseller’s business and in accordance with the terms of the End User License
Agreement.

5.  As between Telstra Customer or reseller and
Telstra, Telstra and its licensors shall own all right, title and interest in
the Products.

6.  The Telstra Customer or reseller shall hold
the Products and the proprietary and confidential trade secret information of
which they consist in strict confidence, and take at least the same precautions
to protect the confidentiality of the Products and such information as it takes
for its own confidential and proprietary information of like importance, but in
no event less than reasonable care.  The
Telstra Customer or reseller shall further agree not to disclose, provide or
otherwise make available the Products and the proprietary and confidential
trade secret information of which they consist or such information in any form
to any person other than reseller’s employees with a need to know.

7.  The Telstra Customer or reseller may not
modify or make works derived from the Products and may not reverse engineer,
decompile, disassemble or otherwise attempt to discover the source code of the
Product (so far as such prohibitions are permitted by law).

8.  If licensed to government entities, any
provisions that may be necessary under applicable government rules and
regulations in order to protect Vistula’s and its licensors’ rights in relation
to the particular government entity.

 

20

 

9.  The Telstra Customer or reseller’s rights to
use the Products shall terminate if the Telstra Customer or reseller fails to
comply with any of the material terms or conditions of the End User License
Agreement.

10.  The liability of Vistula and its licensors
shall be limited to the same extent as Vistula’s and its licensors’ liability
is limited in Vistula’s agreement with Telstra. 
Vistula and its licensors shall be indemnified to the same extent as
Telstra is indemnified in the End User License Agreement.

 

21

 

EXHIBIT D

Description of Training and Support to be given by Vistula to Telstra

•                  Support means 24x7 online
and offline support to Telstra only.

•                  Online support means
NetYantra/Vistula support personnel connecting to the V-Cube server Telstra’s
location through the internet, and/or responding to technical queries over an
online chat facility like yahoo messenger or over the phone. Telstra should
make sure that the required connectivity and access permission is provided at
its site for online support.

•                  Offline support means
NetYantra/Vistula support personnel responding to technical queries by email.

•                  Support shall include the
prompt delivery to Telstra, at Vistula’s expense, of all updates and
workarounds with respect to the Products and associated documentation released
by NetYantra/Vistula from time to time and of all error corrections, software
patches and bug fixes with respect to the Products and associated documentation
released by NetYantra/Vistula or required by a Telstra Customer from time to
time. For the purposes of this Agreement, all such updates, workarounds, error
corrections, software patches and bug fixes shall be deemed to be “Products.”

•                  Telstra will use its
commercially reasonable efforts to ensure that faults or problems reported to
Vistula by Telstra are handled as follows:

 

Priority
1 — Response by Vistula within 1 hour of receipt of report. Rectification of
reported fault or problem by Vistula within 4 hours of receipt of report if the
fault or problem requires a software update or 
patch.

A
priority 1 fault shall be a critical fault which prevents or would prevent
users from using the Services.

Priority
2 — Response by Vistula within 4 hours of receipt of report. Rectification of
reported fault or problem by NetYantra within 24 hours of receipt of report if
the fault or problem requires a software update or  patch.

A
priority 2 fault shall be an urgent fault which imposes severe limits or
restrictions on the use of important functionality so as to materially affect
the use of the Services.

Priority
3 — Resolution time frames to be agreed between both Telstra and Vistula on a
case by-case basis (but no later than 7 days following receipt of report of
problem or fault by NetYantra).

A
priority 3 fault is a fault which may cause Telstra to suffer inconvenience,
but which is not necessarily noticeable to individual users, or in any event
does not prevent them being able to use the Services, save for minor
functionality issues.

•                  The format in which faults
or problems are communicated to Vistula by Telstra shall be agreed between the
Parties within thirty (30) days from execution of this Agreement. All 

 

 

22

 

fault reports by Telstra
shall provide reasonable details concerning the installation of the Products,
the problem or fault, the efforts of Telstra to cure the problem or fault and
any relevant observations of Telstra.

•                  The Support must be provided
by employees of NetYantra/Vistula sufficiently skilled to assist Telstra in
resolution of problems and errors.

•                  Vistula will make
commercially reasonable efforts to make sure that the Internet and telecom infrastructure
at Vistula/NetYantra support center is in service at all times. However
Services from Vistula is subject to service availability of telecom and
Internet infrastructure at Vistula/NetYantra premises.

•                  Optionally Telstra may post
Vistula technical support personnel at Telstra locations, the cost of such
services shall be set forth in a statement of work agreed by the parties.

 

TRAINING

Vistula training activities

2-Day System/Network
Administrator training at Telstra’s premises. Training includes but shall not
be limited to Provisioning and Administration of  V-Cube IP-PBX, Periodic maintenance
activities to be carried out on the IP PBX, Backup processes, Reporting,
Trouble shooting and incident ticketing with NetYantra Support.

Training topics to include:

1.                           System
Overview, Components & V-Cube Interfaces.

This
section provides an overview of the technologies involved, protocols used, how
the different components interact with each other, Different administrative
roles in the IP PBX application, and levels of management and user access to
the system. Trainees also go through the different login screens in the system.

2.                           System
Management

Overview
of system management along with meaning and interpretation of real time
parameters of the server displayed on the management page.

a.                     Nycubed Stop/Start/Restart —
Starting and stopping the server cleanly.

b.                    Backup logs — Checking logs,
Backing up logs to report a problem. Taking a system snap shot.

 

3.                           System status

This
section goes through the real time monitoring of the IP PBX activity. Explains
the currently Active User and Call Lists.

4.                           Configure
SIP/H.323 Accounts

Overview
of configuring an ITSP account, making SIP/H.323 dial plans, adding and
deleting dial plans and routes. Mapping numbers.

 

23

5.                           Routing options

Setting
up routing options, Routing based on time, protocol, dialing prefix. Explains
Routing options and dial plans.

6.                           Conferencing

Overview
of different methods to initiate a conference, setting up conferencing options,
conference permissions.

Hands on training on

a.                     Call to conference migration

b.                    Scheduled conferencing

c.                     Conference bridge
application

 

7.                           IVR & IVRS

This
section covers setting up an IVR tree, multi-lingual tree with language
options, IVRS command, response syntax, Integration with 3rd party
Databases, creating IVRS scripts

8.                           Pre/Post paid

Creating
a pre/post paid user, Adding and deleting users to a specific plan, creating a
new plan.

9.                           IP-PBX features

This
section gives an overview of IP-PBX features and functionalities, adding and
deleting users, setting user permissions and bandwidth restrictions.

Hands on training on

a.                     Adding a user / roaming user

b.                    User services and bandwidth
restrictions

c.                     Setting voice mail and time
based forwarding options

d.                    Call access lists

e.                     Call parking & call
regret

f.                       Rule based call
forwarding

g.                    Call to conference migration
and configuration

h.                    Conference scheduler

i.                        Setting
voicemail boxes

j.                        Voicemail email
and email notification

 

10.                     Question and Answer Session

 

11.                     NetYantra support operations

This
section gives an overview of the NetYantra support process and online trouble
shooting.

 

24

 

12.                     Reporting a problem

This
section covers, Problem-reporting process, mandatory information required while
reporting a problem, co-coordinating with NetYantra support.

13.                     Instant Messaging basics.

Gives
an overview of the support Instant Messaging, synchronizing with NetYantra
support on chat for troubleshooting, role of the Administrator in the support
process.

14.                     Training Summary

 

15.                     Wrap up Question and Answer
Session

 

 

25

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