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EXHIBIT 10.29
AGREEMENT
On the Creation and Functions of the Joint Venture
"SOVAM TELEPORT"
The Institute for Automated Systems ("IAS"), a juridical person under
the laws of the USSR, and San Francisco/Moscow Teleport, Inc. ("SFMT"), a
juridical person under the laws of California, hereby agree to the following:
ARTICLE 1
IAS and SFMT (the "Participants") hereby establish a joint venture
under the laws of the USSR, to be created in the USSR in the city of Moscow
("the Venture"). The Venture is to be established for the transmission of
packet-switched digital information between the USSR and the USA, and for the
purposes of providing and ensuring users of digital packet-switched computer
communications in the USSR and USA with advanced means of fulfilling joint
humanitarian, scientific, technical, and commercial projects, and with
consultation and computer technology training. The Venture will also develop
and implement solutions to complex problems of its customers. To pursue these
goals, the Venture will carry out other commercial activities and provide goods
and services to customers in the USSR and abroad, as the Venture wishes. The
Venture will independently develop and approve its own program of economic,
production, and trade activities.
ARTICLE 2
Name for the Venture:
In Russian:
["[ILLEGIBLE]"]
In English:
"SOVAM TELEPORT".
Location of the Venture:
XXXX, 000000, Xxxxxx, Xxxxxxxxx Xxxxxx, 0x.
ARTICLE 3
The Venture will be established and will operate until the effective
date of termination of this Agreement.
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ARTICLE 4
The Venture will be a legal entity governed by Soviet law. The Venture
will be established, function and conduct its activities in accordance with
Soviet legislation, this Agreement, and the Charter, which is an integral part
of this Agreement. Where this Agreement and the Charter appear contradictory or
inconsistent, the terms of this Agreement will prevail.
ARTICLE 5
This Agreement will become effective, and the Venture will be deemed
to establish and begin its operations, on and from the date of its registration
with the USSR Ministry of Finance.
ARTICLE 6
The capital stock of the Venture will initially consist of cash with a
value of 500,000 U.S. dollars and will be formed by the contributions of the
Participants. IAS will contribute the sum of 250,000 U.S. dollars in roubles
and will thus own 50% of the capital stock of the Venture. The conversion of
this sum from U.S. dollars into roubles will be made in accordance with the
official exchange rate of the USSR Gosbank on the day of the contribution. SFMT
will contribute the sum of 250,000 U.S. dollars, and will thus own 50% of the
capital stock of the Venture. IAS and SFMT will make their contributions to the
capital stock of the Venture in cash, to the Venture's accounts in the USSR
Gosbank and the USSR Vneshekonombank, respectively, within thirty (30) days
after the opening of the accounts, provided that the registration of the
Venture with the USSR Ministry of Finance will have been completed.
ARTICLE 7
The Board of Directors of the Venture may modify the amount of the
capital stock of the Venture, in its discretion. For this purpose, it may
accept supplementary contributions from the Participants, or, if so decided by
the Board of Directors, may use the profits of the Venture itself.
ARTICLE 8
The following necessary funds will be established to ensure and
support the Venture's activities and social benefits:
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(1) a reserve fund of up to 25% of the capital stock.
(2) a fund for research and development of production, science, and
technology.
(3) a fund for employee benefits, including financial and social
benefits and necessary housing.
The amounts and procedures for allocating the funds, and the use of
the funds, will be determined by the Board of Directors.
ARTICLE 9
The valuation of any capital goods, personal property rights and/or
personal rights not pertaining to property to be contributed by either
Participant to the capital stock of the Venture will be carried out by mutual
Agreement of the Participants, taking into account prices on the world market.
The recalculation of the value of contributions into roubles will be conducted
in accordance with the official USSR Gosbank rates of exchange on the day such
currency is deposited in the account of the Venture.
ARTICLE 10
The property of the Venture will be insured by the insurance
joint-stock company of the USSR (Ingosstrakh).
Article 11
The Venture shall have a supreme body, executive body and audit body.
The supreme body and authority of the Venture will be the Board of Directors,
consisting of four (4) members, two (2) appointed by each of the Participants.
Day-to-day operations of the Venture and the implementation of decisions of the
Board of Directors will be carried out by the Management. The Management will
be headed by the General Director, who will be appointed by the Board of
Directors. The Management is formed of the persons appointed by the
Participants. The authority of the Board of Directors and the Management, and
the procedures for making decisions, are described in the Charter. The Venture
shall have an Audit Committee formed according to the procedure described in
the Charter. Matters relating to the administration of the Venture not
addressed by this Agreement will be determined by the Charter or by the Board
of Directors.
ARTICLE 12
For the creation, development, and functioning of the Venture, the
Venture will acquire and/or develop sufficient technical and technological
documentation to
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ensure its effective functioning, including plans for developing technology and
achieving high productivity.
ARTICLE 13
The Venture may carry out its activities in the USSR and abroad. The
Venture shall have an independent economic status and will function on the
basis of complete selfsupport, hard currency self-repayment, and
self-financing. Export and import activities should be carried out by the
Venture independently, as well as through Soviet foreign trade organizations,
or other Soviet foreign organizations engaging in foreign economic activity.
All products or services imported into the USSR by the Venture will be exempt
from all customs duties, or tariffs, or similar charges in accordance with
Soviet legislation.
ARTICLE 14
The Venture will have its own intellectual and industrial property
rights, under and in accordance with Soviet legislation, which rights will
safeguard such property of the Venture as patents, unpatented inventions, "know
how", copyrights, trade secrets, industrial designs and trademark rights.
Procedures for the commercial usage, protection, and defense of these rights by
the Venture within the USSR and abroad will be determined by the Board of
Directors. The Participants will not possess any individual rights to any such
property of the Venture, or to any other objects or property contributed by
either Participant to the capital stock of the Venture. The Venture will have
the right to ownership of property, except for rights to ownership of the
earth, innermost depths of the earth, bodies of water, and forests.
ARTICLE 15
Each Participant, its agents, representatives or employees will
maintain strict confidentiality with respect to all technical, financial,
commercial, and other information received from the other Participant, and will
take all reasonable measures to protect such information from unauthorized use
or disclosure for a period of five (5) years after the termination of this
Agreement. The transfer of such information to third parties, publications or
any other disclosures of such information, at any time until expiration of the
five-year period after the termination of the present Agreement, may be
undertaken only if there is consent of the other Participant (irrespective of
the reason for the termination of the present Agreement).
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ARTICLE 16
The Venture will have the right, in conducting its activities such as
export and import operations and marketing, to invite foreign specialists to
the USSR, to send specialists abroad on business trips, and to make
arrangements to pay their reasonable travel, lodging, meals, and other expenses
in connection with such trips. The Venture will also have the right to conclude
contracts and agreements with the partners in the USSR and in other countries.
ARTICLE 17
The undersigned Participants will use their best efforts to refrain
from conducting activities that might inflict harm on the Venture.
ARTICLE 18
Each Participant will have the right, upon request, to receive
complete, current, and accurate information on the Venture's activity, status
of the Venture's property, profits and losses through its participation on the
Board of Directors. The Venture will, in accordance with Soviet legislation,
keep and report accurate records, and will conduct regular audits as provided
in the Charter. The profits of the Venture, minus a sum allocated to the USSR
State Budget as provided by Soviet legislation, and sums dedicated to the
establishment and increase of the Venture's funds as determined by the Board of
Directors, will be distributed among the Participants in proportion to their
ownership of the capital stock. The Venture will have no obligation to pay any
tax on profit in accordance with applicable Soviet legislation. SFMT will have
the right to transfer its allocated percentage of the Venture's profits in hard
currency abroad, and shall be exempt from applicable withholding taxes to the
maximum extent permitted by Soviet law.
ARTICLE 19
Failure by either Participant to carry out any of its responsibilities
under this Agreement will not be a violation of the Agreement if caused by an
event of "force majeure" (i.e., an event unforeseen by that Participant and
beyond the reasonable control of that Participant).
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ARTICLE 20
The Venture will be liquidated if: (a) the Participants unanimously
decide on its liquidation at a meeting of the Board of Directors; or (b) the
Council of Ministers of the USSR determines that the activities of the Venture
do not conform to the aims and purposes set forth in this Agreement or to the
Charter. Either Participant has the right to withdraw from the Venture giving
written notice 12 months in advance. In the event of liquidation of the
Venture, the Participants will receive monetary and/or commodity returns based
on the residual value of their contributions in portions corresponding to their
ownership of the capital stock of the Venture at the moment of liquidation,
after the satisfaction of all debts owed by the Venture to third parties.
ARTICLE 21
In the event that disagreements or disputes arise with respect to the
interpretation or performance of this Agreement or any of its provision, the
Participants will use their best efforts to resolve them through consultation.
Disagreements or disputes that are not settled by such consultation will be
submitted to binding arbitration. Each disagreement or dispute relating to the
day-to-day operations of the Venture will be resolved by the Court of
Arbitration of the USSR Chamber of Commerce and Industry. All disputes between
the Participants, or among the Participants and the Venture, will be resolved
by an arbitrator appointed by the Stockholm Chamber of Commerce in Stockholm,
Sweden, in accordance with its arbitration rules. All decisions resulting from
such arbitration will be final and binding on all Participants thereto.
ARTICLE 22
Changes and additions to this Agreement and/or the Charter will be
valid only if they are presented in written form and signed by authorized
representatives of both Participants.
ARTICLE 23
The personnel of the Venture will primarily consist of Soviet
citizens. The Management will determine the number of personnel, under the
guidance and subject to the discretion of the Board of Directors.
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ARTICLE 24
The Venture may create branches and representative offices in the USSR
and/or abroad, which will exist and act in accordance with provisions adopted
by the Board of Directors. Branches of the Venture may be designated as
separate legal parties, in which case they will not be liable for the
obligations of the Venture and the Venture will not be liable for the
obligations of the branches. Authorized representatives of the Venture will not
have separate legal status, but will act in the name of the Venture.
ARTICLE 25
In the event that the present Agreement does not become effective
pursuant to Article 5 within six (6) months from the date of signing of this
Agreement by the Participants, this Agreement will have no further force or
effect, and the Participants will have no liability to one another. From the
moment this Agreement is executed, all previous or other correspondence, or
negotiations relating to it will have no further force or effect. Appendices to
the present Agreement are its integral parts. This Agreement is executed on
the ____ day of ____, 1989, in four original copies, Russian and English, both
versions being identical and equally valid.
THE LEGAL ADDRESSES OF THE PARTICIPANTS WILL BE:
INSTITUTE FOR AUTOMATED SYSTEMS SAN FRANCISCO/MOSCOW TELEPORT,
INC.
103009 Moscow 0000 Xxxxxxxxxx Xxxxxx
Nezhdanova Street, 2a San Francisco, CA 94115 U.S.A.
SIGNED FOR THE PARTICIPANTS:
IAS SFMT
By: [ILLEGIBLE] By: [ILLEGIBLE]
-------------------------- --------------------------
Its: Its: President
------------------------- -------------------------
Date: 20.09 , 1989 Date: 20 SEPT, 1989
--------- --------
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SUPPLEMENT TO THE AGREEMENT
ON THE CREATION AND FUNCTIONS OF THE JOINT VENTURE
"SOVAM TELEPORT"
THE CHARTER
OF THE JOINT VENTURE
The joint venture "SOVAM TELEPORT", to be referred to below as the
"Venture", is established by the Agreement on the creation and
functions of the Venture, to be referred to below as "Agreement" and
dated
Article 1
1. The Participants to the Venture are the Institute for
Automated Systems, a juridical entity governed by
Soviet law, which will be referred to below as "IAS",
and the corporation San Francisco/Moscow Teleport
Inc., a juridical entity governed by the laws of
California, which will be referred to below as "SFMT".
2. The number of Participants to the Venture is being
increased by the admission of Cable & Wireless PLC, a
juridical entity governed by the laws of England,
which will be referred to below as "C&W", and can be
further increased as agreed upon in Article 4 below.
Article 2
3. The Venture is established.
(i) To organise and operate means for
satellite and/or fibre optic digital
packet-switching and information
transfer between the USSR and the
rest of the world;
(ii) To provide users of digital
packet-switched computer
communications in the USSR and the
rest of the world with advanced
means of fulfilling joint
humanitarian projects, commercial
activities and carrying out joint
scientific research;
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(iii) To service users of digital
packet-switched computer
communications in the USSR and the
rest of the world by providing goods
and services to them (including the
rendering of consultation and
training on computer technology,
etc.); and
(iv) To develop and implement solutions
to complex problems of the Venture's
customers.
4. The Venture is established for the purpose of
providing high quality digital packet-switched
computer communications service and promoting the
efficiency of computer and telecommunications
facilities on the basis of recent advances in science
and technology and achieving stable and profit-making
activities for itself.
5. The Venture's business is that which the Board of
Directors may, from time to time, decide and includes
the operation and management of packet-switched data
networks, the public offering of managed data network
services, the management and public offering of
electronic mail, messaging and host enquiry services,
the undertaking of consultancy contracts, the design
and completion of turnkey networking contracts and
the design and provision of wide area networking
systems and services to customers paying in freely
convertible currency and roubles within the USSR and
between the USSR and the rest of the world. The
Venture will conduct all other activities authorised
by the Agreement including conducting such other
business as the Board of Directors may decide, from
time to time, in accordance with this Charter.
Article 3
6. The Venture is a legal entity governed by the laws of
the Union of Soviet Socialist Republics.
7. The Venture has full rights as a legal entity from
the moment it is registered with the USSR Ministry of
Finance.
8. The Venture has the right on its behalf to conclude
contracts, to acquire property rights and personal
rights which do not pertain to property, and to
fulfil its commitments. The Venture may be called as
a plaintiff or defendant in court, in arbitration, or
in an arbitration court, as the case may be.
9. The Venture has the right to carry out directly
export and import operations that it deems necessary
or convenient for its economic activities. The
Venture also has the right to establish independent
prices for its services.
10. The Venture can create branches and representative
offices in all countries. The branches of the Venture
will be separate legal entities and will not have to
answer for any obligations of the Venture, nor will
the Venture have to answer for the obligations of its
branches.
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11. To carry out its functions, the Venture has the right
to make and pay for necessary transport arrangements
(including the purchase or rental of vehicles) in the
USSR, USA, and other countries.
12. The Venture has the right to purchase or rent plots
of land, buildings (including the housing of the
Venture's foreign personnel) and other properties, to
receive and pay for communal and other services and
to decide on questions concerning design and
construction.
13. The Venture has the right to sign contracts with
insurance, transportation and contracting
organisations, as well as other organisations that
provide services. The Venture may enter into any and
all contracts related to the operation or activities
of the Venture.
14. The Venture has the right to transfer information
within and outside of the country related to its
commercial and organisational functions with the aid
of electronic mail or printed correspondence,
telegraphs, telephones, teletype, and telefax and
through all types of digital, analog and satellite
information transfer networks.
15. If necessary, the Venture may obtain credit on a
commercial basis:-
(i) In foreign currency from the USSR
Vneshekonombank, from banks in
foreign countries or from other
organisations; or
(ii) In Soviet roubles from the USSR
Gosbank or from the USSR
Vneshekonombank. The credit obtained
may be guaranteed by the property of
the Venture. Guarantees may also be
granted by a third party. The
Venture will have accounts in the
USSR Gosbank and in the USSR
Vneshekonombank or such other
banking entity acceptable to the
Venture;
(iii) The Venture has the right to
exchange hard currency according to
the official exchange rate of the
USSR Gosbank, within the limits of
its own hard currency funds in
accordance with established
procedures.
16. The Venture will own and use its property within the
guidelines of Soviet law and in accordance with its
goals and the nature of the property.
17. The Venture will use all of its property to cover its
obligations.
18. The Soviet government and the Participants in the
Venture will not be liable for any of the Venture's
obligations and the Venture will not be liable for
the obligations of the Soviet government or its
Participants.
19. The Venture's activities shall be governed by Soviet
legislation, by the Agreement and by the present
Charter, subject to applicable inter-state and
inter-governmental agreements mutually established by
the USSR, the USA and the UK.
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20. The Venture will have a seal as approved by the Board
of Directors of the Venture.
21. The Venture is located in Moscow, USSR, Xxxxxxxxx
Xxxxxx, 0x.
22. The official languages of the Venture are Russian and
English and these languages are also the working
languages of the Venture.
Article 4
23. The Venture forms the Charter Fund from the
contributions of the Participants to enable the
functions of the Venture to be carried out. The
Charter Fund will increase to an amount equivalent of
US$750,000. The size of this capital stock, the
relative shares of the Participants and the procedure
for forming the capital stock are laid out in the
Agreement. The procedures and dates for such
contributions to the capital stock of the Venture
will be defined by the Board of Directors. The Board
of Directors of the Venture will issue certificates
indicating the Participants, contributions to the
capital stock and their ownership of the capital
stock.
24. None of the Participants to the Venture has the right
to transfer its share in the Venture in whole or in
part to a third party without first offering its
share to the other Participants, who shall have the
right to take up such sale share on a pro rata basis
in accordance with their existing shareholding.
If any Participant fails to take up its pro rata
share in the sale share, the remaining Participant(s)
shall be entitled to take the whole, on a pro rata
basis if more than one Participant. The price of any
such transfer will be agreed between the Participants
or determined by the Participants purchasing such
sale share as the case may be. In no event will the
price offered to the Participants with respect to
such share be greater than the price at which such
share is offered to a third party. Without prejudice
to the generality of the foregoing, none of the
Participants to the Venture may transfer its share in
the Venture, in whole or in part, to a third party at
any time during the three (3) years following the
initial registration of foundation documents of the
Venture incorporating C&W as a Participant, without
the prior written consent of all the other
Participants.
25. The Venture can be financed through equity and debt.
Debt financing is to be on terms acceptable to all
Participants. The capital stock of the Venture may
be supplemented by profits from the economic
activities under the decision of its highest body
and, if need be, by additional contributions of the
Participants in proportion to their shares in the
capital stock.
26. The Participants of the Venture do not possess
individual rights to any objects which constitute the
property of the Venture, including objects
contributed by the Participants to the capital stock
of the Venture.
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Article 5
27. The profits in foreign currency and Soviet roubles
obtained by the Venture will be retained for use in
the activities of the Venture, as determined by the
Board of Directors, and will constitute the Venture's
funds. Payments will be made to the USSR State
Budget as required by Soviet law. Remaining profits
shall be distributed among the Participants in
proportion to their shares in the capital stock of
the Venture on such terms as the Participants shall,
from time to time, agree.
28. The Venture will create the following funds:-
(i) A reserve fund not to exceed twenty
five percent (25%) of the capital
stock of the Venture;
(ii) A fund for research and development
of production, science and
technology;
(iii) A fund for employee benefit,
including financial and social
benefits and necessary housing;
(iv) A special purpose fund; and
(v) Other funds.
29. The Board of Directors will determine the
composition, aim, size, sources and the procedure for
using each fund and the funds will be completely at
the disposal of the Venture.
30. The profits of the Venture minus the sums that are
due to the USSR State Budget as specified by Soviet
legislation and the sums allocated to the funds
should be distributed among the participants in
proportion to their shares in the capital stock on
such terms as the Participants agree.
Article 6
31. The highest body of the Venture is the Board of
Directors, which is comprised of the members
appointed by the Participants, under the condition
that there will be at all times an equal number of
members designated by each Participant and at least
one member from each Participant, save where a
Participant's percentage holding falls below twenty
five percent (25%), in which case that Participant
shall only be entitled to appoint one member.
32. A member of the Board of Directors may resign at any
time from the Board of Directors without providing
the reasons. In such event he shall be replaced by a
reserve member appointed by the same Participant who
appointed the resigning member.
33. A member of the Board of Directors may appoint an
alternate director and shall simultaneously notify
the Board of such appointment.
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34. Representatives of IAS, SFMT and C&W will be
appointed as the Chairman of the Board of Directors
on an annual rotating basis within sixty (60) days
after the Shareholders' Annual General Meeting.
35. The Board of Directors has the right to make
decisions on any question concerning the functions of
the Venture. The Board of Directors will have the
exclusive right and authority:-
(i) To introduce changes and additions
in this Charter;
(ii) To determine major policies and
directions for the operations of the
Venture and long-term plans and
determine and approve reports for
its activities and to approve the
annual operating plan and annual
budget;
(iii) To introduce changes in the size of
the capital stock of the Venture;
(iv) To determine the administrative
structure of the Venture;
(v) Subject to Article 9.54 below, to
appoint and, if need be, relieve of
duty the General Director and his
first and other deputies;
(vi) To appoint the members of the Audit
Committee and to approve of its
reports and conclusions;
(vii) To determine the size, procedure and
time for introducing additional
contributions, subject to any
Participant's right to convert any
existing loan into equity;
(viii) To determine the schedule for
creating and using the funds, the
distribution of profits and the
procedures for covering or otherwise
managing losses;
(ix) To deal with questions pertaining to
the establishment and closing of
branches and representative offices;
(x) To make decisions on obtaining
credit in excess of that figure from
time to time stipulated in the
annual operating plan;
(xi) To introduce new participants to the
Venture;
(xii) To make decisions on the liquidation
of the Venture;
(xiii) To choose a Liquidation Committee,
to appoint and relieve its members
and to approve its reports;
(xiv) To decide on the salaries and
bonuses of the members of the Board
of Directors, top management, members
of the Audit Committee and
assistants; and
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(xv) To approve contracts (whether
between the Venture and one or all
of the Participants or with third
parties) that are not authorised by
the Board of Directors in the annual
plans or budgets for that year and
that require the Venture to spend
more than US$50,000 or its
equivalent in foreign currency.
36. The Board of Directors has the right to delegate
certain functions, including ones which the present
Charter describes as being within the authority of
the Board of Directors, to the General Director for
resolution or action.
Article 7
37. The Board of Directors will review issues pertaining
to the activities of the Venture and will make
decisions concerning them at its meetings.
38. Each member of the Board of Directors, the General
Director of the Venture and the First Deputy General
Director will have the right to introduce issues for
the consideration of the Board of Directors.
39. Regular meetings of the Board of Directors will be
held to the extent that the Board of Directors deems
necessary, but not less than six (6) times per year
or as the Board of Directors shall otherwise decide.
40. Special sessions of the Board of Directors may be
convened by the Chairman of the Board of Directors,
by any member of the Board of Directors or any
Participant to the Venture, or by the General
Director of the Venture or the First Deputy General
Director.
41. The time and place for holding meetings of the Board
of Directors will be determined by the Board of
Directors.
42. The Chairman of the Board of Directors or the Deputy
Chairman will be responsible for organising each
meeting of the Board of Directors and will notify the
members of the Board of Directors in writing
(including by telex or electronic means) sixty (60)
days before the scheduled meeting date. The notice
will include the exact time and place and a general
agenda for the meeting.
43. The Chairman of the Board of Directors will serve as
the Chairman of the meeting. In his absence, the
Deputy Chairman will so serve.
44. The Chairman will appoint a Secretary who will be
responsible for keeping the minutes of each meeting.
All of the members of the Board of Directors will
have an opportunity to review the minutes. The
minutes will state who was present at the meeting,
how the members voted, what matters were discussed,
which decisions were made and what particular
opinions were presented. Each member of the Board of
Directors will sign the minutes after being
personally satisfied in their accurateness.
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45. Any member of the Board of Directors who is unable to
participate in a meeting may create a written proxy,
granting to its representative the power to
participate in the meeting and to cast votes on its
behalf. Representatives so appointed will strictly
observe the directions of the member regarding
participation and voting as set forth in that written
proxy. Their representative, pursuant to a
duly-authorised proxy, may sign the minutes on
behalf of a member of the Board.
46. Each member of the Board of Directors, including the
Chairman, will have one vote. However, in addition to
the votes held by the members appointed by C&W, three
(3) additional votes will be exercisable by those
said members in the following circumstances:-
(i) At every meeting of the Board of
Directors convened for the approval
of the annual operating plan and
annual budget until such time as C&W
recovers full payment of all
interest and loan; and/or
(ii) At every meeting of the Board of
Directors, notwithstanding Article
8.50 hereafter, during each quarter
following two (2) consecutive
quarters in which the Venture has
losses or negative operational
cashflows, where such losses or
negative cash flows have not been
previously approved in the annual
operating plan of the Venture.
47. Meetings will be deemed validly held and a quorum
present if at least three (3) of the six (6) members
of the Board are present, one representing each
Participant.
48. The Board of Directors will discuss the results of
each fiscal year's activities at an annual general
meeting to be held no later than three (3) months
after the end of that fiscal year.
Article 8
49. Subject to Article 7.46 and Article 8.50 below, at
any meeting of the Board of Directors, resolutions
proposed on issues or questions raised with and
required to be decided by simple majority of the
Board of Directors will only be adopted it at least
one member representing each Participant has voted in
favour thereof.
50. A unanimous vote of all of the members of the Board
of Directors or their authorised representatives will
be necessary when dealing with the following issues:-
(i) Any alterations of or additions to
this Charter;
(ii) Approvals of proposals for changes
in the size of capital stock;
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(iii) Determining the size, procedure and terms of requests for
additional capital contributions from the Participants,
subject to any Participant's rights to convert any existing
loan into equity;
(iv) Appointment or anticipatory termination of the General
Director, the First Deputy General Director and/or other
deputies and/or members of the management;
(v) Appointment of the members of the Audit Committee and approval
of its reports and conclusions;
(vi) Reviewing issues regarding liquidation of the Venture, the
selection of a Liquidation Committee, the appointment and
recall of its members and the approval of final reports;
(vii) Introducing new participants to the Venture;
(viii) Determining the procedure for distribution of profits and
determining the procedure for covering losses;
(ix) Determining major policies and new business and services
directions in addition to the business as defined in Article
2.5 for the operations of the Venture;
(x) Making decisions on obtaining credit in excess of that figure
from time to time specified in the annual operating plan;
(xi) Determining the salaries and bonuses of the members of the
Board of Directors, top management, members of the Audit
Committee and assistants; and
(xii) Approving contracts (whether between the Venture and one or
all of the Participants or with third parties) that are not in
the annual plans or budgets for year and that require the
Venture to spend more than US$50,000 or its equivalent in
foreign country.
51. In the event that the Members of the Board of Directors fail to reach
a unanimous decision on any issue and if the issue remains outstanding
for a period thirty (30) days, it shall be referred to the
Chairman/Chief Executive of the Participants who shall meet to resolve
the issue within thirty (30) days of any referral. Then:-
(i) If the Chairman/Chief Executive fails to resolve the issue and
the issue remains outstanding, then the dissenting Participant
may serve on the other Participants a notice of sale ("Sale
Notice") requiring each of them to buy the dissenting
Participant's percentage holding, together with the benefit of
all loans made by the dissenting party pro rata to their
respective holdings on the terms stipulated in the Sale
Notice. The Sale Notice shall stipulate the percentage
holding, the price and terms of payment. The other
17
Participants shall be entitled to introduce a third party to
replace the dissenting Participant and the latter shall not
unreasonably withhold its consent to the admission of the
third party. The dissenting Participant may withdraw such Sale
Notice any time prior to the expiry of the above referred
thirty (30) day period;
(ii) If, within thirty (30) days of receipt of such Sale Notice,
the non-dissenting Participant(s), whether collectively or
individually, refuse to accept the terms of such Sale Notice,
then each of them may serve their own respective Sale Notice
on the dissenting Participant, requiring the latter to acquire
the whole of their respective percentage holding within thirty
(30) days, together with the benefit of all loans made by the
non-dissenting Participant, as stipulated in the Sale Notice,
for the price stipulated in the Sale Notice of the dissenting
Participant; and
(iii) The dissenting Participant shall, on completion of the sale,
procure the resignation of all Directors appointed or deemed
appointed by the dissenting Participant and shall do all such
things and execute all such documents as may be necessary to
give effect to the sale pursuant to such Sale Notice.
52. By unanimous action of the members of the Board of Directors,
decisions and votes of the Board of Directors may be validly made in
writing (including agreement by telex or electronic means) without an
actual meeting, and will have the same power and legal force as a
decision made at a valid meeting of the Board of Directors.
Article 9
53. The day-to-day activities of the Venture will be conducted by the
management, headed by the General Director and one (1) or more
co-Directors or the First Deputy General Director.
54. The structure and staff of the management will be formed of the
persons nominated by the Participants and approved and appointed by
the Board of Directors.
55. The General Director and the First Deputy General Director and such
other management personnel where respective functions and
responsibilities shall be determined by the Board of Directors, shall
be nominated, approved and appointed in accordance with the foregoing
Article 9.54.
56. The General Director and any co-Director or First Deputy General
Director will report to the Board of Directors and will have
operational responsibility for the actions of the Venture and the
fulfilment of the tasks and functions assigned.
18
57. The General Director and any co-Director or First Deputy General
Director of the Venture:-
(i) Will manage the business and be responsible for the general
supervision of the economic and financial activities of the
Venture;
(ii) Will be responsible for implementing the annual operating plan
and budget for the Venture and submitting revisions and
updates on the same every three (3) months to the Board of
Directors;
(iii) Will hire and dismiss employees, with the exception of members
of the management;
(iv) Will carry out all decisions of the Board of Directors and
present reports to the Board of Directors concerning their
implementation;
(v) Will manage and protect the property of the Venture, including
its funds, as authorised by the Board of Directors;
(vi) Subject of Article 6.35(15) will conclude commercial contracts
on behalf of the Venture, without proxies, and ensure that
they are fully performed;
(vii) Will perform all other functions stipulated in this Charter or
specified by the Board of Directors;
(viii) Will represent the Venture in dealings with other
organisations, ventures and entities and also with government
organisations of participating countries and third countries
with respect to all matters concerning the Venture or its
activities as permitted by the Agreement or this Charter.
(ix) Will deal with questions pertaining to the establishment and
closing of branches and representative offices.
58. The management will have the right to carry out foreign currency
transactions in accordance with the decisions of the Board of
Directors.
59. The General Director will have the right to make decisions on all
other matters concerning the Venture that are not within the exclusive
jurisdiction of the Board of Directors. Subject to Article 6.35(15),
the General Director, the First Deputy General Director, and other
person(s) so appointed in writing by the management may sign contracts
and other legal documents on behalf of the Venture.
Article 10
60. The Venture will have independent economic status and will function on
the basis of complete self-support, hard currency
19
self-repayment and carry out its activities in accordance with the
annual productivity plan and other plans approved by the Board of
Directors.
61. The Venture will conduct its bookkeeping, statistical record keeping
and reporting activities in accordance with applicable Soviet law and
generally accepted U.S. accounting principles. All books, records,
minutes, accounts and any other documents maintained by the Venture
will be prepared in Russian and English.
62. Bookkeeping documents of the Venture will be kept in Russian and in
English. Expenses and revenues will be entered on the books of the
Venture in roubles or in foreign currency.
63. The Venture may obtain credit from Soviet and/or foreign finance
organisations and from foreign firms in accordance with applicable
USSR procedures.
64. The fiscal year of the Venture will begin on 1st January and end on
31st December of each calendar year.
65. At the end of each fiscal year or promptly thereafter at a time and
place specified by the Board of Directors, the General Director will
present a report of the activities of the Venture during that fiscal
year, including proposals concerning the distribution of profits, to
the Board of Directors for its review.
66. The audit review of the economic and commercial activities of the
Venture will be conducted by Ernst & Young, or any such other party as
the Board of Directors shall decide, and which will be paid for this
service.
67. General monitoring of the financial and economic activities of the
Venture and its branches will be carried out by the Audit Committee,
which shall consist of three (3) members.
68. The Chairman and members of the Audit Committee will be nominated by
the Participants with an equal number of nominees designated by each
of the Participants and approved by the Board of Directors.
69. The Chairman of the Audit Committee will be appointed alternately from
among representatives of each Participant.
70. The members of the Audit Committee will hold office for terms of two
(2) years and may be re-appointed.
71. The Audit Committee is responsible for its activities to the Board of
Directors and will submit its audit reports, as well as its commentary
on those reports, to the Board of Directors in writing at least two
(2) times per year.
Article 11
72. The management of the Venture may conclude a collective
20
bargaining agreement with the trade union associated
with the Venture. The content of this agreement will
be determined in accordance with Soviet law.
73. The salaries, work hours, vacations and social
security benefits available to Soviet employees of
the Venture will be governed by Soviet law.
74. The Venture may hire foreign specialists to work for
the Venture on the basis of individual contracts with
each such person.
75. The salaries, vacations, pensions and other benefits
available to foreign employees of the Venture will be
governed by individual contracts to be concluded by
the management of the Venture with each such person.
The norms of Soviet legislation should be applied to
foreign employees in all other respects.
76. The Venture will pay set sums to the USSR State
Budget for the social insurance of Soviet and foreign
employees and the pensions of Soviet employees in
amounts and at rates determined for Soviet State
organisations.
77. The pension benefits of foreign employees hired by
the Venture will be transferred directly to the
appropriate pension funds of the country of their
permanent residence.
78. The salaries and bonuses of foreign employees paid
in foreign currency and not spent in the USSR may be
freely transferred abroad at the request and in sole
discretion of these persons.
79. The Venture will have the independent right to hire
and dismiss employees in accordance with labour
agreements it may have concluded with them.
Article 12
80. A Liquidation Committee consisting of representatives
from each of the Participants will be established if
there is a decision to liquidate the Venture pursuant
to the Agreement or applicable Soviet law.
81. If the Venture's activities do not conform to the
tasks and goals stipulated by the present Charter and
the Agreement, the Council of Ministers of the USSR
may also decide to liquidate the Venture by written
notice to the Venture.
82. If the Venture is liquidated:
(i) The Board of Directors shall form
the Liquidation Committee, will
prepare a financial statement of the
Venture and compile a proposed
liquidation schedule and present
them to the Board of Directors for
approval;
(ii) The Board of Directors will decide
how to dispose of all property of
the Venture;
21
(iii) All property leased or loaned to the Venture will be returned
to the owners thereof; all rental fees to that Participant and
unpaid at the moment of liquidation will be added to the total
amount due to that Participant upon the final division of
funds; and
(iv) The capital stock of the Venture and other funds remaining
after satisfying the valid demands of the Venture's creditors
will be divided proportionately among the Participants of the
Venture according to their respective contributions from time
to time to the capital stock of the Venture. The liquidation
shall be registered with the USSR Ministry of Finance.
Article 13
This amended Charter is effective on and from the date of its registration with
the RSFSR Ministry of Finance or other appropriate authority.
Legal Addresses of the Participants:
Institute for Automated Systems San Francisco/Moscow Teleport Inc.,
103009 Moscow, 3278 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxxx Xxxxxx, 0x. Xxx Xxxxxxxxx,
0000 XXXX. Xxxxxxxxxx 00000,
X.X.X.
IAS SFMT
.................... ....................
DATE: DATE:
103009 Moscow, 3278 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxxx Xxxxxx, 0x, Xxx Xxxxxxxxx,
0000 USSR. Xxxxxxxxxx 00000,
X.X.X.
22
AMENDMENTS AND CHANGES NO. 1 TO THE AGREEMENT
ON THE CREATION AND FUNCTIONS OF THE JOINT VENTURE
"SOVAM TELEPORT" DATED 20TH SEPTEMBER 1989
The Institute for Automated Systems ("IAS"), a juridical person under the laws
of the Russian Federation, and San Francisco/Moscow Teleport, Inc. ("SFMT"), a
juridical person under the laws of California, USA and Cable and Wireless Plc
("C&W") a juridical person under the laws of England hereby agree to the
following:-
A. In connection with the admission of Cable and Wireless plc as a
Participant in Sovam Teleport and pursuant to Article 22 of the Agreement On
the Creation and Functions of the Joint Venture, IAS, SFMT and C&W have agreed
to make the following changes to the said Joint Venture Agreement which shall
be amended to read as indicated below, and shall otherwise remain unchanged:-
1. Amend the names of the Parties to state as follows:-
"The Institute for Automated Systems ("IAS"), a juridical person under
the laws of the Russian Federation, and San Francisco/Moscow Teleport,
Inc. ("SFMT"), a juridical person under the laws of California, USA
and Cable and Wireless Plc ("C&W") a juridical person under the laws
of England hereby, agree to the following:"
2. Amend ARTICLE 1 as follows:-
(i) Replace the words "hereby establish" in the first line with
"have established".
(ii) Replace "USSR" in the second line of Article 1 with "Russian
Federation".
(iii) Replace the words "is to be" in the third line with "was".
(iv) Replace the words "information between the USSR and the USA"
in the fourth line with "information within and between the
Russian Federation and/or other members of the Commonwealth of
Independent States ("CIS") and the world".
23
- 2 -
(v) Replace "USSR" in the fifth line with "Russian Federation and
the other members of the CIS".
(vi) Replace the word "USA" in the sixth line with "the world".
(vii) Replace "USSR" in the tenth line of Article 1 with "Russian
Federation and the other members of the CIS".
(viii) Insert a new sentence at the end of Article 1 to read as
follows:-
"The Venture conducts the Business as defined in this Article
1 below and will conduct such other business as the Board of
Directors may decide from time to time in accordance with this
Agreement and the Charter."
(ix) Add a definition of the Business of Sovam Teleport at the end
of Article 1 to read as follows:-
"THE BUSINESS" means the operation and management of packet
switched data networks, the public offering of managed data
network services, the management and public offering of
electronic mail, messaging and host enquiry services, the
undertaking of consultancy contracts, the design and
completion of turnkey networking contracts and the design and
provision of wide area networking systems and services to
customers paying in freely convertible currency and to rouble
paying customers within the Russian Federation and/or other
members of the CIS and between the Russian Federation and/or
other members of the CIS and the rest of the world and in
addition to the aforesaid such other business as the Board of
Directors may from time to time decide.
3. Amend Article 2 by replacing "USSR" with "Russian Federation".
4. Amend ARTICLE 3 by replacing the words "will be" in the first line
with "is".
24
- 3 -
5. Replace the first two sentences of ARTICLE 4 to read as follows:-
The Venture is a legal entity governed by the applicable laws of the
Russian Federation. The Venture is established, and will function and
conduct its activities in accordance with the applicable laws of the
Russian Federation, this Agreement, and the Charter, which is an
integral part of this Agreement and such other agreements which the
Parties may enter into from time to time."
6. Amend ARTICLE 5 as follows:
(i) In the first sentence of ARTICLE 5 replace "USSR" with
"Russian Federation".
(ii) Add the following sentence at the end of ARTICLE 5:
"This amended Agreement is effective from the date of
registration with the Russian Federation Ministry of Finance
or other appropriate government authority."
7. Amend ARTICLE 6 to read as follows:-
"The Charter Fund of the Venture will be increased to US$750,000
formed by the contributions of the relevant Participants. IAS has
contributed the sum of US$250,000 in roubles and will thus own 33.33%
share in the Venture. The conversion of this sum from US dollars into
roubles has been made in accordance with the official exchange rate
of the USSR Gosbank on the day of the contribution. SFMT has
contributed the sum of US$250,000 and will thus own 33.33% in the
Venture. C&W will contribute the sum of US$250,000 and will thus own
33.33% in the Venture. C&W will make its cash contribution of
US$250,000 to the Charter Fund of the Venture, to the Venture's
accounts in the Vneshekonombank, or such other banking entity
acceptable to the Venture, respectively, within thirty (30) days after
the opening of the accounts, provided that the registration of the
amended Joint Venture Agreement with the Russian Federation Ministry
of Finance (or such other relevant governmental authority) will have
been completed."
25
- 4 -
8. Amend ARTICLE 9 by replacing the word "either" in the second line with
"any" and by the deletion of the last sentence.
9. Amend ARTICLE 10 to read as follows:
"The property of the Venture will be insured by Ingosstrakh or such
other joint-stock insurance company acceptable to the Venture".
10. Amend ARTICLE 11 as follows:-
(i) Replace "executive" in the first line with "management".
(ii) Replace "four(4)" in the third line with "six(6)".
(iii) Insert a new fourth and fifth sentence to read "The Management
will be formed of the persons nominated by the Participants
and approved and appointed by the Board of Directors, and
shall include the General Director, a First Deputy General
Director, and such other management personnel whose respective
functions and responsibilities shall be determined by the
Board of Directors. The Management will be headed by the
General Director." and delete the words "who will be
appointed by the Board of Directors. The Management is formed
of the persons appointed by the Participants."
11. Amend ARTICLE 13 as follows:-
(i) Replace the words "may carry" with "carries" in the first
line.
(ii) Replace "USSR" with "Russian Federation and the other members
of the CIS".
(iii) Replace the words "or tariffs" with "or customs-related
tariffs (for the avoidance of doubt, such tariffs shall not
include those commonly referred to as telecommunications
tariffs)".
26
- 5 -
(iv) In the last line replace "Soviet" with "applicable".
12. Amend ARTICLE 14 as follows:-
(i) Replace the word "will" in the first line with "can".
(ii) Replace the word "Soviet" with "applicable".
(iii) Insert a new sentence between "trademark rights." and
"Procedures.." in the fourth line to read as "The right to
use any intellectual and industrial property rights developed
by the Venture will be licensed to the Participants on terms
to be agreed by the Board of Directors."
(iv) Replace "either" in the eighth line with "any".
(v) In the third sentence replace "USSR" with "Russian Federation
and the other members of the CIS".
(vi) Insert a new sentence between "the Venture." and "The" in the
eighth line to read as "In the event of liquidation of the
Venture the Participants shall be entitled freely to exploit
all intellectual property rights developed by the Venture."
(vii) Add a new paragraph to the Article to read as follows:-
"Any intellectual property rights owned by or used by the
Participants, subject to any sub-license, and which are used
by the Venture will remain the property of the Participant
which owns the right, or subject to any such sub-license as
aforementioned, and no rights of ownership in respect of that
right are acquired by the Venture unless specifically assigned
or licensed by the Participant to the Venture."
13. Amend ARTICLE 15 by replacing the word "other" in the eighth line with
"disclosing"
27
- 6 -
14. Amend ARTICLE 16 by replacing "USSR" in the second and sixth lines
with "Russian Federation and the other members of the CIS".
15. Amend ARTICLE 18 as follows:-
(i) Replace "Soviet" throughout the Article with "applicable".
(ii) Replace "USSR" with "Russian Federations".
(iii) Replace the words "upon request" in the first line with
"monthly and whenever requested".
(iv) Insert between "Board of Directors" and "will be distributed"
in the eighth line the words "and after full repayment of any
interest and principal of any debt owed to any of the
Participants.
(v) Insert "and C&W" in the eleventh line between "SFMT" and "will
have".
16. Amend ARTICLE 19 to read as follows:-
"Failure by any Participant to carry out any of its responsibilities
under this Agreement will not be a violation of the Agreement if
caused by an event of "force majeure", namely, an event beyond the
reasonable control of that Participant including but not limited to,
industrial disputes, natural disaster, acts or regulations of any
governmental or supranational bodies or authorities and none of the
Participants shall be liable or have any responsibility of any kind
for any loss or damage thereby incurred or suffered by the Venture."
17. Amend ARTICLE 20 to read as follows:-
(i) Replace "USSR" and insert "Russian Federation" in the third
line.
(ii) Delete the second sentence entirely.
28
- 7 -
(iii) Delete and replace the third sentence with "In the event of
liquidation of the Venture, the Participants will receive
monetary returns and/or return of their assets according to
Article 12.81 of the Charter."
(iv) Insert a new paragraph to read as follows:-
"Without prejudice to the generality of the foregoing or to their
respective rights and remedies at law or hereunder, C&W and SFMT have
the right to withdraw from the Venture if any of their respective
interests are expropriated or nationalised or if distribution of
profits to C&W and/or SFMT is prevented in any way as a result of any
change in applicable laws or regulations."
18. Replace ARTICLE 21 as follows:-
"All disputes or differences which arise out of or in connection with
this Agreement or out of its construction, operation, termination or
cancellation shall be settled by means of negotiations between the
Participants. If the Participants cannot settle any such dispute or
difference within twenty-one (21) days after first conferring, then
such dispute or difference shall be settled by arbitration. The award
of the arbitrators shall be final and binding upon the Participants.
The arbitration shall be in accordance with the UNCITRAL Arbitration
Rules in effect on the date of this Agreement, except that in the
event of any conflict between those Rules and the arbitration
provisions of this Agreement, the provisions of this Agreement shall
govern. The Stockholm Chamber of Commerce shall be the appointing
authority except for the specific provisions contained in points (i),
(ii) and (iii) below.
The number of arbitrators shall be three. Each party to the
arbitration proceedings shall appoint one arbitrator. If two of the
Parties are joint claimants or joint respondents they shall together
appoint one arbitrator. If within fifteen (15) days after receipt of
the claimant's notification of the appointment of an arbitrator the
respondent has not, by telegram or telex, notified the claimant of the
name of the arbitrator he appoints, the second arbitrator shall be
appointed in accordance with the following procedures:
29
- 8 -
(i) if the respondent is IAS, the second arbitrator shall be
appointed by the Russian Chamber of Commerce and Industry (or
its successor);
(ii) if the respondent is C&W, the second arbitrator shall be
appointed by the President of the Law Society of England and
Wales;
(iii) if the respondent is SFMT, the second arbitrator shall be
appointed by the American Arbitration Association, San
Francisco, California, USA;
(iv) if within fifteen (15) days after receipt of the request from
the claimant, the Russian Chamber of Commerce and Industry (or
its successor) or the President of the Law Society of England
and Wales or the American Arbitration Association of San
Francisco, California, USA, as the case may be, has not, for
any reason whatsoever, by telegram or telex, notified the
claimant of the name of the second arbitrator, the second
arbitrator shall be appointed by the Stockholm Chamber of
Commerce. The two arbitrators thus appointed shall choose the
third arbitrator who will act as the presiding arbitrator of
the tribunal. If within thirty (30) days after the appointment
of the second arbitrator, the two arbitrators have not agreed
upon the choice of the presiding arbitrator, then at the
request of any party to the arbitration proceedings the
presiding arbitrator shall be appointed by the Stockholm
Chamber of Commerce and shall be of a nationality other than
that of the Russian Federation, British, or American.
The arbitration, including the making of the award, shall take place
in Stockholm, Sweden and (except in those cases where this Agreement
expressly refers to the applicability of Russian law) the arbitrators
shall resolve any such dispute or difference referred to them in
accordance with the substantive laws of Sweden.
All submissions and awards in relation to arbitration hereunder shall
be made in English and all arbitration proceedings shall be conducted
in English."
30
- 9 -
19. Amend ARTICLE 23 by replacing "Soviet" with "Russian" and the words
"under the guidance and subject to the discretion of the Board of
Directors." with "and through the General Director will be responsible
for the hiring and dismissal of employees provided however, that the
following members of the Management may only be dismissed upon the
prior approval of the Board of Directors: the General Director, the
First Deputy General Director and any other persons to whom this
Article 23 shall apply by decision of the Board."
20. Amend ARTICLE 24 by replacing "USSR" with "Russian Federation and the
other members of the CIS".
B. The parties agree that this Agreement for Amendments and Changes No. 1
is an indispensable part of the Joint Venture Agreement and shall be
read and construed together with the aforementioned Joint Venture
Agreement.
C. Pursuant to Article 22 of the Joint Venture Agreement, changes and
additions must be presented in written form and signed by the
authorised representatives of IAS and SFMT. The signatures as appear
below constitute such authorisation.
D. The legal addresses of the Participants shall be amended to include the
following address of Cable and Wireless plc as follows:-
"Cable and Wireless Plc
Xxxxxxx Xxxxx
Xxxxxxxxx Xxxx
Xxxxxx XX0X 0XX
England"
31
- 10 -
E. This Amendments and Changes No.1 to the said Joint Venture Agreement
is executed this [26] day of [May 1992] in six original copies, Russian
and English, all versions being identical and equally valid and is
effective on and from the date of its registration with the Russian
Federation Ministry of Finance or other appropriate authority.
Signed for the Participants:
Signed by [W. A. Xxxxx]
for and on behalf of
CABLE AND WIRELESS PLC /s/ W. A. XXXXX
-----------------------------------
Senior Manager
Signed by [X. X. Xxxxxxx]
for and on behalf of
THE INSTITUTE FOR AUTOMATED SYSTEMS /s/ X. X. XXXXXXX
-----------------------------------
Director
Signed by [ ]
for and on behalf of
SAN FRANCISCO/MOSCOW TELEPORT, INC. /s/ [ILLEGIBLE]
-----------------------------------
Director
