Registration of Securities of a Small-Business Issuer — Form 10-SB
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10SB12G Registration of Securities of a Small-Business 27 101K
Issuer
2: EX-3.(I) Certificate of Incorporation 1 6K
3: EX-3.(II) By-Laws 10± 40K
5: EX-10 Joint Venture Agreement 11 39K
6: EX-10 Joint Venture Agreement 13 42K
4: EX-10 Lease 1 7K
7: EX-27 Financial Data Schedule 1 7K
EX-10 — Joint Venture Agreement
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Exhibit 6.3
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("MOU") is made as of November 25,
1998.
BY AND AMONG: V.I. Internet Telecommunications Inc., a corporation duly
incorporated under the laws of Canada with legal domicile in Montreal, Province
of Quebec, Canada (hereinafter referred as "Company"), hereby represented by Mr.
Mickael Macinnis, Mr. Viatcheslav Makarov, Mr. Ilya Gerol, duly authorized as he
so declares.
ON THE ONE HAND
AND: Telecom XXI Development, LTD, A company registered in Cayman
Islands, (hereinafter referred to as "Telecom XXI") with a registered office at:
W.S. Walker & Company, First Floor, Caledonian House, Mary Street, P.O. Box
265G, George Town, Grand Cayman, Cayman Islands, represented by Dmitri Novikov,
President.
ON THE OTHER HAND
(hereinafter referred jointly as the "Parties" or individually as the
"Party").
WHEREAS, Telecom XXI is desirous of establishing a voice, fax and data
telecommunication service to/from Russian Federation and other countries; and
WHEREAS, Telecom XXI has extensive communications expertise through the
State Directory -- "Technic and Communication", and
WHEREAS, Telecom XXI has the resources and capability to implement the
Russian component of any required system that could provide telecommunication
services in St. Petersburg and other areas of the Russian Federation; and
WHEREAS, Telecom XXI can secure all necessary permits, licenses and
approvals for the legitimate operation of a Russian telecommunication service;
and
WHEREAS, Telecom XXI, through its normal links with other agencies,
municipal governments and with the Commonwealth of Independent States (CIS), is
desirous of allowing and encouraging these governments to make use of such
telecommunication services; and
WHEREAS, the Company has extensive communications expertise including
marketing and operation of prepaid telecommunication services; and
WHEREAS, the Company has extensive North American and International
management, marketing trade funding and promotional experience and capability;
and
WHEREAS, the Company has long-established links with communications
systems providers and users throughout North America; and
WHEREAS, the Company wishes to establish telecommunication services
to/from North America on its Internet Telephone Protocol network to its
customers to/from the Russian Federation; and
WHEREAS, the Company needs to implement an Internet Telephony Protocol
Communication Systems (the "System") between, on one hand, Moscow and St.
Petersburg hubs and, on the other hand, the Montreal gateway hub to North
America and the rest of the world, so to be able to provide the
telecommunication services ("Project"); and
WHEREAS, Telecom XXI wishes to associate with VI to jointly pursue the
implementation of the Project and the operation of the System; and
WHEREAS, the Parties also desire to set forth their mutual
understandings regarding their cooperation and obligations in the implementation
of the Project and the operation of the System as well as the essential elements
of the formation of a new company by them for such purposes.
NOW, THEREFORE, the Parties hereby agree as follows:
1. OBJECTIVE
The purpose of this MOU is to establish the relationship between the
Parties, their respective obligations and the material conditions of the
formation of an operating company that will be used by the Parties to provide
the System in order to meet the needs of the Russian Federation, its private
corporate sector and its private citizens in their communication connection with
North America, Europe and rest of the world.
2. FORMATION OF THE OPERATING COMPANY
The Parties will form a corporation organized under the laws of Russian
Federation. Such corporation shall be known as "Interservice Telephone Russia"
or by any other name agreed to by the Parties and approved by the competent
authorities ("Operating Company"). Such Operating Company will be created no
later than thirty (30) days after execution of this MOU.
2.1 Shareholdings.
The Parties hereby agree that their respective percentages of equity
interests in the Operating Company will be as follows:
Shareholder % Equity Interest
VI - 80%
Telecom XXI - 20%
a) Indirect Shareholdings and Foreign or
Other Ownership Restrictions.
The Parties further agree that their
respective equity interest in the Operating
Company may be held by each Party either
directly, and/or (in such Party's sole and
absolute discretion) indirectly through one
or more of such party's Affiliates (as
defined in Article 6 below). The Parties
acknowledge and agree that the Shareholder's
Agreement (as defined in Section 2.2 below)
will include express rights, restrictions
and obligations of each of the shareholders
regarding any change of control of any of
the shareholders of the Operating Company
(the "Shareholders").
b) Transfer Restrictions and Rights of First
Refusal for Equity Allocated to the Parties.
If, at any time before or after formation of
the Operating Company, any Party should wish
to sell part or all of its equity interests
in the Operating Company, that Party must
first offer such equity interests to the
other Party at fair market value upon the
same terms and conditions that it would
offer to sell such equity interests to a
third party, before offering for sale such
equity interests to any third party upon
same terms and conditions.
c) Price for Acquisition of Equity Interests.
The amount of the capital contributions of
the shareholders and other financing needs
of the Operating Company will be as mutually
agreed upon by the Parties. The Parties
currently contemplate that the initial
capital contributions will be proportionate
to their equity interests in the Operating
Company.
2.2 Shareholders' Agreement.
The parties shall negotiate and form the Operating Company and
enter into a shareholders' agreement setting forth their rights (including
voting rights) and obligations regarding their respective equity interests in
the Operating Company including, among other things, the transfer restrictions,
rights of first refusal and mutually agreed upon provisions (the "Shareholders'
Agreement").
a) The International Operator.
The parties further agree that the
Shareholders' Agreement will provide that
the day-to-day management of the business of
the Operating Company or its Affiliate shall
be supervised and controlled by the Company.
The Parties contemplate that there will be
an agreement between the Company and Telecom
XXI (or their respective Affiliates) with
respect to their supervision and control of
the management of the business of the
Operating Company, and that such agreement
will be submitted to all Parties.
b) Board Representation and Decision making.
The Parties currently contemplate that the
Operating Company will have a eight (8)
member board of directors (the "Board")
(each director to have one vote), and the
shareholders will be entitled to appoint
directors to the Board in accordance with
the equity ownership interests in the
Operating Company from time to time held by
them in the Operating Company (unless
otherwise agreed in the Shareholders'
Agreement). Based on the percentage of
equity interests in the Operating Company
set forth in Section 2.1 above, the
Directors would be appointed as follows:
6 director(s) will be appointed by the Company;
2 director(s) will be appointed by Telecom
XXI.
The Shareholders' Agreement will provide the
fundamental decisions regarding the
Operating Company will require a Super
Majority Shareholder vote (eighty per cent
(80%) or more of all outstanding shares)
and/or a Super Majority Board vote (eighty
per cent (80%) or more of the total number
of directors comprising the full Board), as
appropriate under applicable law. It is
currently contemplated by the Parties that
fundamental decisions will be decisions
within the following general categories (to
be specifically agreed in detail in the
Shareholders' Agreement);
Annual Financing and Operating Plans
Major Technological Platform choices
Related party Transactions
Major Transactions including sale of assets
Significant Changes in Financial Leverage
Appointment and Dismissal of the President
c) Operating Company Appointments
The Company will be entitled to nominate the
respective persons to be appointed as the
President of the Operating Company, subject
to Super Majority approval of the Board, and
as the Vice-President of Operations of the
Operating Company, subject to simple
majority approval of the Board.
2.3 Services Agreement
The Parties agree that the Operating Company may, from time to
time, enter into agreements (collectively the "Services Agreement") with any of
the Parties (or their respective Affiliates) pursuant to which such entities
will provide services to the Operating Company on terms and conditions to be
agreed between such entity, on the one hand, and the Operating Company, on the
other hand.
2.4 Language of Agreements
All agreements (including this MOU) shall be prepared and
executed in both the Russian and English languages. All agreements, when in
final form, shall be promptly sent to an agreed upon translator, and the costs
of such translation shall be shared equally by the Parties.
3. OBLIGATIONS OF THE COMPANY
As part of its contribution to the Project, the Company shall within
three (3) months following the execution of the MOU as well as any other
document required to implement the MOU, except as otherwise provided below,
provide at its costs the following:
3.1 all the technical equipment and telephone lines required to operate
the telecommunication services between Russian Federation and Canada, as well as
the interconnection in Montreal, Canada with the Montreal gateway hub so to
extend the telecommunication services throughout the world;
3.2 the marketing and promotion of the use of the telecommunication
services throughout Canada and the United States by state and private corporate
sectors, telephone corporations and private individuals telecommunication
services through the use of prepaid telephone cards;
3.3 prepaid telephone cards for promotion and sale in Russian
Federation and North America;
3.4 establishment of a credit account record for all the Operating
Company prepaid customers;
3.5 payment for the costs of telephone lines and usage between St.
Petersburg and Moscow as well as local and long distance charges between Russian
Federation and other destinations in the world and vice versa.
3.6 the financing of the Project through proper banking and investment
arrangements and the keeping of Telecom XXI inform of such arrangements
throughout the implementation of the Project and the operation of the System;
3.7 an accounting system for the implementation and operation of the
System based on generally accepted accounting principles and the applicable
Russian Federation laws;
3.8 training, both technical and administrative, of the employees of
the Operating Company involved in the implementation and operation of the
System.
4. OBLIGATIONS OF TELECOM XXI
Telecom XXI, as part of its participation into the Project,
will provide at its costs, within one (1) month following the execution of the
MOU as well as any other document required to implement the MOU, unless
otherwise provided below, the following:
4.1 Telecom XXI shall secure and execute this MOU as well as
any other document deemed necessary by the Parties to implement the MOU and to
establish the Operating Company;
4.2 Telecom XXI shall obtain the issuance of an exclusive and
irrevocable permit(s) from the competent state authorities of the Russian
Federation, as well as any other permit(s) or authorization(s), that is (are)
necessary to implement and operate the System for a period of at least ten (10)
years;
4.3 Telecom XXI shall obtain and grant the permission to the
Operating Company to start its activities within ten (10) days following its
incorporation and the issuance of the necessary permit(s);
4.4 Telecom XXI shall provide the office space and all other
facilities mutually agreed to between the Parties, as well as the necessary
technical and office personnel that the Parties will deem necessary to install
and operate the System;
4.5 Telecom XXI shall install all the equipment provided by VI
to implement the System; Telecom XXI shall also install all the facilities (such
as electrical power and outlets, telephone access, internet access, etc.) deemed
necessary to operate the System;
4.6 Telecom XXI will assist the Operating Company with the
physical implementation, operation and maintenance of the technical equipment
required to operate the System and will provide the interconnection in Moscow to
extend the telecommunication services throughout Russian Federation and the CIS;
4.7 Telecom XXI shall have the MOU as well as any other
document required to implement the MOU, whether mentioned or not in this MOU,
registered with the competent authorities of the Russian Federation within ten
(10) days of their execution by the Parties;
4.8 Telecom XXI shall be responsible for the relationship
between the Operating Company and the state authorities of the Russian
Federation at all levels of Government so to maintain a positive relationship in
place.
5. OPERATING COMPANY RESPONSIBILITIES
The Operating Company shall have the responsibilities decided
by its shareholders and, without limiting the foregoing, shall be responsible
for the implementation and operation of the System. It is understood and agreed
by the Parties that the Operating Company shall, among other things:
5.1 market and promote the use of the prepaid
telecommunication services in the Russian Federation by state and private
corporate sectors at all levels of Government, as well as by private individuals
through the sale of prepaid telephone cards;
5.2 provide VI with the reimbursement of the calls made by its
customers using the System, including reimbursement from prepaid telephone
cards;
5.3 pay all operational costs and expenses incurred by the
Operating Company, including without limitation cost of rent, employees
salaries, promotion and advertising costs, permits and interconnection fees, and
any other overhead costs and/or expenses. All these costs, fees and expenses
shall be charged to VI with a ten per cent (10%) surcharge. Any local telephone
costs for incoming calls from outside of Russian Federation will be charged to
VI at cost. Any surcharge over costs and/or expenses invoiced to VI shall be
adjusted on a quarterly basis by VI and Operating Company to ensure a fair
sharing of profits and losses for both VI and Operating Company;
5.4 pay, on a weekly basis, the services fees to the Parties
resulting from provision by such Parties of consulting services, in accordance
with the Services Agreements;
5.5 maintain adequate accounting system of its operations
based on generally accepted accounting principles and applicable Russian
Federation laws; open and maintain an operation account with a Russian bank as
selected by the shareholders.
6. CONFIDENTIALITY
Each Party (sometimes hereinafter referred to as a "Receiving
Party") agrees to hold in confidence and not to disclose to any third party (a)
any and all information provided by a Party directly or indirectly on its behalf
(sometimes referred to as a "Disclosing Party") to any Receiving Party, whether
orally or in writing and before or after the date of this MOU, (b) all analysis,
compilations, studies and other documents and records prepared by the Receiving
Party, its advisers or its representatives that are generated from or reflect
such information, (c) any technical, economic and market studies and business
plans jointly prepared by the Parties in relation to the Project, and (d) the
terms of this MOU or any other facts relating to the Project and/or the
Operating Company contemplated hereby (collectively, the "Information"), except
(i) if such Information is required by securities laws or other applicable laws
or court orders in Russian Federation and/or Canada, but only after written
notice of such disclosure requirement has been given by the Receiving Party to
the Disclosing Party, (ii) if such Information is disclosed by the Receiving
Party to its representatives, agents and advisors (who may include lending
institutions and insurance companies) who need to know such Information for the
purpose of assisting the Receiving Party with the evaluation, planning,
establishment and operation of the Project and the Operating Company, but only
after such persons have been directed by the Receiving Party to treat such
Information in accordance with the terms of this MOU, or (iii) with the prior
written consent of the Disclosing Party in respect of the Information referred
to in clauses a) and b) of this Article 6. Further, each Party agrees not to use
the Information for any purpose other than the evaluation, planning,
implementation and operation of the Project and the Operating Company.
The obligations set forth in the preceding paragraph will not
apply to a Receiving Party in respect of (A) information that is or becomes
generally available to the public other than as a result of a disclosure
directly or indirectly by such Receiving Party or (B) information that is or
becomes generally available to such Receiving Party on a non-confidential basis
from a source other than the Disclosing Party, provided that such source is not
known by such Receiving Party to be subject to any prohibition against
transmitting the information to such Receiving Party and that such Receiving
Party is not aware that the availability of such information from such source
resulted directly or indirectly from information supplied by the Disclosing
Party.
As used in this MOU, "Affiliate", with respect to any person
or entity, means any individual, firm, corporation, association, partnership,
joint venture, trust or other entity, now or hereafter existing, which, directly
or indirectly, controls, is controlled by or is under common control with such
person or entity; a person or entity "controls" another person or entity (the
"subject person") if such person or entity (alone or in combination with an
Affiliate(s)), possesses the power, by contract or ownership of voting stock or
other equity interests (i) to elect a majority of the members of the board of
directors (or other similar governing body) of the subject person, or (ii) if
the subject person is not a corporation, to otherwise direct or cause the
direction of the management and policies of the subject person; and "controlled"
has a corresponding meaning.
7. PUBLIC ANNOUNCEMENTS
No news release, public announcement, advertisement or
publicity concerning this MOU, the Project, the Operating Company, the System or
any other matters contemplated hereby may be made without the prior approval of
the Parties, except as may be required by securities laws or other applicable
laws or court orders, in which case, such disclosure shall be subject to clause
(i) of Article 6.
8. EXCLUSIVITY
8.1 Each Party agrees that from the date of execution of this
MOU through the formation of the Operating Company and the execution of the
Shareholders' Agreement (the "MOU Exclusivity Period"), it will not enter into,
will cause its wholly-owned subsidiaries not to enter into and will use its
reasonable, good faith efforts to cause its Affiliates not to enter into, any
discussions, negotiations or agreements with any other person(s) or entity(ies)
(including, without limitation, any telecommunication operator with respect to
investing or agreeing to invest (directly or indirectly) in, or providing
general strategic consultation or advisory services to, any person, entity or
group proposing to provide implementation and operation of an Internet Telephone
Protocol network to customers in Russian Federation, in each case other than
pursuant to this Agreement; provided, however, that nothing in this Article 8
shall be construed as restricting the rights of any Party or of any Party's
Affiliates to continue with its normal correspondence business with any
international telecommunication services carrier or provider.
8.2 The Parties agree that provisions relating to exclusivity
for the period following the MOU Exclusivity Period shall be governed by terms
to be included in the Shareholders' Agreement.
9. TERMINATION
Subject to the survival provisions of Section 13.6, this MOU will
terminate on the first to occur of any of the following events (the "Termination
Date"):
9.1 the date on which this MOU is replaced by the comprehensive legal
agreements and documents referred to in Article 2 hereof,
9.2 the date of the mutual written agreement of all of the Parties to
so terminate.
9.3 If a Party fails to fulfill its obligations under this MOU and,
after having received a notice to that effect from the other Party, does not
cure such failure within sixty (60) days of receipt of the notice, and the
non-defaulting Party terminates this MOU as a result of an arbitration decision
and of its confirmation by a court of competent jurisdiction.
Upon the occurrence of the Termination Date, each Party shall promptly
return to the other Party(ies) all Information obtained by it in relation to the
other Party(ies). In addition, each Party shall remain liable for the payment of
its share of agreed-upon expenses incurred or committed pursuant to Article 3
and 4 hereof through the Termination Date. Unless otherwise agreed in writing by
the Parties hereto, the provisions of Articles 6 and 7 hereof will survive the
Termination date and the termination of this MOU.
10. RELATIONSHIP OF PARTIES
No Party has the power or authority to legally bind the other
Party hereto, and nothing herein contained will be construed as authorizing a
Party to act as an agent or representative of the other Party hereto or to
legally bind the other Party hereto.
11. GOVERNING LAW: DISPUTES
11.1 The entering into, construction, and performance of this MOU shall
be governed by and interpreted in accordance with the laws of Russian
Federation.
11.2 The Parties hereto agree that any disputes, controversies or
differences which may arise between or among them out of, in relation to, or in
connection with this MOU or its subject matter, including disputes as to
validity, performance, breach or termination, shall be resolved by them as
expenditiously as possible pursuant to amicable and good faith discussions.
11.3 Any dispute, controversy or difference between or among the
Parties (an "International Arbitration"), which cannot be settled pursuant to
amicable and good faith discussions as provided above, shall be submitted to
binding arbitration in accordance with the Arbitration Rules of the United
Nations Commission on International Trade Law as in force on the date of
commencement of the subject International Arbitration, shall be conducted in
English and in Stockholm, Sweden, and the law governing such arbitration
proceedings shall be law of Russian Federation, and the decision of such
arbitrators shall be rendered in law.
11.4 In the event of any inconsistency between the Russian version and
the English version of this MOU or of any agreement referred to in Article 2,
the English version shall prevail.
11.5 The validity and construction of this Article 11 shall be governed
by the laws of Russian Federation.
12. NOTICES
All notices to be given among the Parties will be validly given when
delivered by courier or by Facsimile as set out below:
If to the Company: ________________
If to Telecom XXI: 6 Proletarskaya Diktatura square, St. Petersburg,
193124, Russia. fax +7 812 326-1312
13. GENERAL
13.1 Preamble; Integration: The preamble and the documents referred
hereto shall form an integral part hereof as if recited at length. The terms and
provisions contained in this MOU together with the documents referred hereto
constitute the entire agreement between the Parties with respect to the subject
matter hereof.
13.2 No Waiver: No amendment or waiver of this MOU shall be binding
unless executed in writing by both Parties. No waiver of any of the provisions
of this MOU shall constitute a waiver of any other provision (whether or not
similar) nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
13.3 Severability. any provision in this MOU which is held to be
illegal or unenforceable in any jurisdiction shall be ineffective to the extent
of such illegality or unenforceability without invalidating the remaining
provisions and any such illegal or unenforceable provision shall be deemed to be
restated to reflect as nearly as possible the original intention of the Parties
in accordance with applicable law.
13.4 Extended Meanings. In this MOU, words importing the singular
number include the plural and vice versa and words importing gender include all
genders. The word "person" includes, subject to the context in which it appears,
an individual, partnership, association, body corporate, trustee, executor,
administrator or legal representative.
13.5 Headings. The division of this MOU into Articles and subsections
and the insertion of headings are for convenience of reference only and shall
not affect its construction or interpretation.
13.6 Survival. The following provisions shall survive the termination
of this MOU together with such other provisions of this MOU which expressly or
by their nature survive termination:
Article 6 CONFIDENTIALITY
Article 7 PUBLIC
ANNOUNCEMENTS
Article 11 GOVERNING LAWS,
DISPUTES
Article 13 GENERAL
13.7 Binding Effect: This MOU will be binding on and enure to the
benefit of the Parties hereto and their respective successors and permitted
assigns. No Party may assign this MOU or any of their rights or obligations
hereunder or delegate the performance thereof to a third party without the prior
written consent of the other Party except that the Parties may assign this MOU
to one or more of their subsidiaries or Affiliates.
13.8 Counterparts: This MOU may be executed in one or more
counterparts, each of which when so executed shall be deemed an original, but
all of which taken together shall constitute one and the same complete and
executed agreement.
13.9 Effective Agreement: If executed in counterparts, this MOU shall
become effective when each Party to this MOU shall have received counterparts
hereof signed by the other Party hereto.
13.10 Delays: In those cases where the activities of one Party or a
responsibility of one Party called for in this MOU, or otherwise, are dependent
on an activity or responsibility of the other Party, or is dependent on
receiving information or approval from the other Party, and the activity,
responsibility, information or approval is not given or notified in such one
Party, then the activity or responsibility of such one Party may be delayed a
corresponding amount of time.
IN WITNESS HEREOF, the Parties to this MOU have caused it to be
executed and sealed by their duly authorized officers as of the day and year
first written above.
TELECOM XXI DEVELOPMENT LTD.
------------------------------------
V.I. INTERNET TELECOMMUNICATIONS INC.
-------------------------------------
Dates Referenced Herein
| Referenced-On Page |
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| This ‘10SB12G’ Filing | | Date | | First | | Last | | | Other Filings |
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| Filed on: | | 8/5/99 | | | | | | | None on these Dates |
| | 11/25/98 | | 1 |
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