FORM 10-SB
Amendment No. 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the
Securities Exchange Act of 1934
INTERNET VIP, INC.
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(Name of Small Business Issuer in its charter)
Delaware
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1155 University St., Suite 602, Montreal, Canada H3B 3A7
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(Address of principal executive offices) (Zip Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value
(Title of Class)
<PAGE>
PART I.
Item 1. Description of Business.
(a) Business Development
Internet VIP, Inc. (the "Company"), a Delaware corporation, was organized on
November 13, 1998. The Company has not been involved with any bankruptcy,
receivership or similar proceedings. The Company has not had any material
reclassification, merger, consolidation, or purchase or sale of a significant
amount of assets not in the ordinary course of business.
(b) Business of Issuer
The Company
The Company was formed to sell long distance international telephone services
using the new technology, Voice over Internet Protocol ("VoIP").
The Company's revenues are to be derived from two distinct, yet complementary
markets:
1. (Wholesale) Providing carrier and termination services,
worldwide, for other telecom companies, at ----- competitive rates; and
2. (Retail) Providing telephone calling origination and termination, at
attractive prices, servicing areas of the world that currently have very
expensive and/or poor quality long distance service. Competitive rates are to
be achieved by using low-cost Internet Protocol gateways and taking advantage
of the efficacy of VoIP technology.
Currently the Company operates two IP telephony gateway centers, one in
Montreal, Canada, and the second in Moscow, Russia. The two centers serve as the
core switches that allow calls to be routed from anywhere in North America or
from Russia to over 240 countries and territories at very low cost.
The Company will initially be servicing two different groups of customers, and
both groups will access the Company's technological platform in a different
manner.
For the first customer group, wholesale customers, the Company will receive long
distance traffic in bulk at its center in Montreal to be routed and terminated,
initially in Russia, and subsequently to other destinations as the Company adds
centers. There is very little overhead cost to the Company for this type of
customer and the Company will simply be earning a price differential as its fee
for providing this service.
The second group of customers will be retail. In the fist phase of operations to
address this marketplace the Company has established business operations in
Russia, and is focusing on outbound long distance traffic from Russia.
Customers in Russia consist of two subgroups. The first customer subgroup will
be from the Russian Ministry of Interior. The Ministry presently has its own
telephone system. When a member of the Ministry calls the world through the
Company's network, he will dial a code to access the Company's equipment that is
located in the Ministry. He will then get a second dial tone and will be able to
dial directly to the world. The Company's equipment takes this call and sends it
over a dedicated line to the Company's switching center in Montreal using VoIP
technology. In Montreal, the Company's mirror image equipment receives the call,
re-packages it for normal phone transmission and then directs it through regular
local phone lines to the intended parties anywhere in the world.
<PAGE>
The second type of subscriber will be individuals or corporations that will have
purchased prepaid calling cards or contracts. For one of these customers to
place a call from any telephone in Russia, he will dial a local access number to
reach the Company's equipment and then input his card number and personal
identification number ("PIN"). The Company's equipment will validate the card
number and PIN and then give the caller a second dial tone allowing him to make
the long distance call. The call is then processed in the same manner as
described above.
For both types of customers, the Company's technology and equipment will process
these steps in milliseconds and the customer will be unable to detect the
difference between a traditional long distance call between Moscow and the world
and a call utilizing the Company's system. The process for a call to Moscow
originating in North America over the Company's system operates the same way
with the customer calling an "800" number to access the Company's North American
platform in the same manner as if he were using a conventional calling card.
All of the Company's technology is state of the art, but the Company is not
dependent on any one vendor in particular. For the hardware in the switching
centers in Montreal and Moscow, the Company is using a configuration and
equipment designed by Ericsson Inc. For the trans-Atlantic fiber optic E-1
lines, the Company has signed a lease with Metrocom (of Russia) to provide the
requisite dedicated fibre-optic circuits between these two cities. The lease is
for one year and costs US$515,520 per year.
The Company operates through a wholly owned Canadian subsidiary corporation,
V.I. Internet Telecommunications Inc. ("V.I. Internet"). V.I. Internet owns and
operates the Canadian switching center, and it owns 80% of a Russian
joint-venture entity, Intertel XXI, established to manage the Company's center
in Moscow. In Moscow, the remaining 20% of the Russian joint-venture company is
owned by the "Special Technique and Communication Services Institute" , an
agency of the Russian Ministry of Interior. The strategy of teaming with a
prominent Russian government agency in Moscow should give V.I. Internet access
to as many local lines as becomes necessary in Russia, and their assistance in
obtaining contracts for outbound traffic from most, if not all, government and
related agencies within the Russian Federation.
The Company, through, V.I. Internet, has letters of intent with governmental and
industrial entities expressing an interest to purchase telephone service from
Russia to the world. The network has been installed and tested and is now fully
functional. The Company has begun the process of converting the letters of
intent to firm contracts. If the Company is successful in converting these
letters to firm contracts, the Company anticipates that by the end of the first
year of long distance service between Russia and the world the Company will be
providing 1,500,000 minutes per month. However, there can be no assurance that
such usage and/or revenue levels, if any, will be attained.
The Company plans to expand its operations within Russia by opening a facility
in St. Petersburg. The Company anticipates the commencement of installation of
an IP switch center in St. Petersburg during July, 2000 and expects to initiate
service from this center by the end of August, 2000.
Our Technology
Conventional telephone service (PSTN) is a circuit-switched technology. When a
call is placed, the system switches open a direct connection between the sender,
and then over a series of switching facilities, to the receiving party. The
connection remains open during the duration of the telephone call. Since no one
else can use the circuit while a call is in progress, more circuits are
required, which leads to inefficiency and expense. This, together with high
tariffs in many jurisdictions, are the basic reasons why telephone companies,
and the intermediate switching companies, charge high prices for their services.
<PAGE>
Internet Protocol (IP) telephony is a packet-switched technology, which is the
basis of all Internet communication. IP breaks network data up into small chunks
or packets, which is then sent out on the Net. These packets are routed using
the most expedient path available at the time, until they reach their
destination. The data can consist of e-mail, video, and for our purposes--voice.
Additionally, IP compression techniques allow five to ten times the number of
voice calls over the same bandwidth as compared to traditional circuit-switched
voice traffic, substantially reducing the cost of carrying this traffic.
Thus, a caller does not have to place a conventional long-distance telephone
call to reach a party anywhere in the world, since with IP telephony, every call
is just a "voice" e-mail away. The caller initiates a local call to a
specialized switching center or gateway connected to an IP provider. The call
travels over the Internet to the receiver's geographic area and a switching
center in that area completes the call over that local's telephone lines. A
growing number of individuals, governments, and corporations are using this
technology every day to send data, voice conversations, and even money.
To avoid the congestion problems on the Net, the Company's telephone traffic
does not in fact use the Net. The Company provides its calling services through
dedicated secured international private lines, expandable as necessary, assuring
a controlled circuit, and giving a high quality of service (QOS) both in clarity
and reliability of transmission. Unlike the Internet, the routing of calls
through the Company's network travel over minimal routes to arrive at the final
destination and is not hindered by volume of traffic over the Net.
Competition
Internet Telephony in Russia has not been represented by big companies yet.
However, there are several small companies (Global M, Maxima, Mos-Teleinternet)
which serve several localities within Downtown Moscow. The investigation
launched into their activities by the Ministry of Communications in November
1998 (the Report to Duma Communication committee on December 11, 1998) had
established that all of these small companies work on a "call back" principle
which is illegal under Russian law. The main problem these companies face is the
necessity to get special licenses from the Ministry of Communications. They do
not currently have these licenses and we believe they are unlikely to receive
them in the near future as no law has been introduced in that regard.
Accordingly, competitors will not be able to legally operate without great
difficulty in the Russian market prior to approximately at least the year 2002
when the market may first start to become officially deregulated. Meanwhile, we
have the agreement with the Ministry of Interior, which has its own telephone
system independent of the Ministry of Communications.
Background on the Industry in Russia.
Ninety (90%) percent of Russian telecommunication systems is concentrated in the
hands of the Ministry of Communication of Russia. The current Minister is Mr. M.
Reiman. The previous minister, Mr. Bulgak, introduced the bulk of the current
rules and regulations regulating the telecommunication industry. Mr. Bulgak also
was the former deputy Prime Minister. All telecommunication activity in Russia
is based on licensing. "Rostelecom", a state company with some private capital
participation, has the major license. This license allows "Rostelecom", through
its municipal affiliates, to concentrate telephone communication on in-country
land line networks and on the use of satellites in cooperation with the major
transnational networks. Internet-telephony, specifically Voice over Internet
Protocol based communications, however, had not been subjected to licensing
until 1999. In his meeting with Dr. Ilya Gerol on February 21, 1998, Mr. Bulgak
repeated his previous stated positions that voice-over-internet-protocol did not
require licensing because the policy was aimed at encouraging the development of
this advanced type of telecommunications. However, in 1999, Mr. Reitman, the new
Minister of Communications, changed this policy and in a letter sent through the
Ministry of Communication on March 27, 1999, he stated that from that date
forward internet-telephony companies operating in the Russian market are to be
licensed. At that time, he signed the first and, to date, the only such license
with Intertel XXI, our Russian subsidiary.
<PAGE>
Mr. Reitman's letter also announced that the licensing is the first step to the
deregulation of the internet-telephony activities which is scheduled to take
place in the year 2002. When asked by Dr. Gerol, Mr. Reitman explained that
deregulation was necessary to bring about a more competitive market. However,
the position of the Minister is that initially the license should be issued on
an exclusive basis to permit this technology (internet-telephony) to prove
itself in the marketplace. This second meeting took place on October 21, 1999 in
Moscow.
The Ministry of Interior operates its own telephone system independently of the
Ministry of Communication due to the specific nature of the activities of the
Ministry. The Ministry's primary functions are focused on law and order issues
and on that basis, historically, in the USSR and now in Russia, the Ministry had
been authorized to run its own communication system independent of the general
public network, subject to different industrial and political terms. The
Ministry of Interior has also been authorized, and continues to be, to run the
network directly serving the government and presidential office. For that
purposes the Ministry had purchased the Israel made system Tediran. By virtue of
having access to this self-contained network, any agreements made by the Company
with the Ministry of Interior and its wholly owned enterprise "Special Technique
and Communication Services Institute" can be approved directly by the government
and need not require specific permission from the Ministry of Communication.
However, it was decided that since "foreign" entities are part owners of
Intertel XXI, obtaining specific approval from the Ministry of Communications
would be judicious. Thus, with the active support of our partners, the Ministry
of Interior, Intertel XXI did in fact, obtain from the Ministry of
Communications the first and only license for the specific internet-telephony
activities provided by the Company.
Russian Market Today
Three segments of the market are targeted by our project: governmental,
commercial (foreign and joint venture enterprises, Russian companies and Russian
branches of non-Russian companies) and private individuals who will buy pre-paid
calling cards. Estimates of the volume of Russian international communications
market is placed at 900 million minutes for the year 1997, (Source:
Telegeography). Over the next 2 1/2 years we hope to capture 10-15% of our
targeted markets in Moscow.
Terms of Payment and Currency
Russian currency today is the ruble. The current conversion rate is
approximately 28.5 rubles a dollar. Despite such a rate the ruble is more stable
than it was after the August 17, 1998 crisis and is expected by many currency
traders to continue to exchange between 25 and 32 rubles a dollar for the
foreseeable future. During most of 1999, the conversion rate was between 23-28.5
rubles a dollar.
The ruble is a convertible currency and can be freely exchanged into any hard
currency. Money may be transferred to foreign countries as part of joint
ventures without any obstacles.
All payments for our services will be based on the pre-payment principle as
exists today throughout the Soviet Federation. Payments will be automatically
transferred from the Central Bank in Moscow on a daily basis, as per
instructions.
Our Moscow partner is the Special Technical and Communication Services Institute
of the Ministry of Interior of Russia. The Russian Ministry of the Interior is
the strongest and most stable organization within the Russian structure with its
own telephone lines and communication services that include governmental,
presidential and other segments.
Our Moscow partner contributes the following:
<PAGE>
*The premises where the equipment is housed with complete security;
*Proper distribution system through already existing channels within the
Ministry's telephone network covering the governmental segment;
*Unlimited fiber optic access to the Moscow telephone network: and
*A level of credibility that is very important for commercial success.
The leading executives of our Moscow JV partner are Major-General V. Khimitchev,
V. Martinov and R. Mananov, all of whom hold PhD degrees and have done post
graduate studies in the US and are specialists in Russia in the field of
communications. Messrs. Khimitchev, Martynov and Mannanov are the senior
executives of the Russian state enterprise "Technique and Communications" within
the structure of the Ministry of Interior. Mr. Khimitchev is the Director
General of this enterprise as well as being the Senior Communication Executive
of the Ministry of Interior. Messrs. Martynov and Mannanov are his deputies.
This enterprise is the owner of 20% of Intertel XXI, the Company's Russian JV
operating entity.
The activities of our joint ventures have been negotiated according to the
Russian Law of Joint Ventures and Law of Investments. Acording to the evaluation
of IMF (statement of M. Comdecu, the president of IMF on January 17 in the
interview to the Russian news agency, Interfax Agency) these laws are the most
liberal laws of that kind in Europe. However, while problems may exist for many
enterprises involved with joint ventures, In our case, the joint venture is with
the Ministry of Interior which is reputable and is much better organized than
the average Russian partner in a joint venture. The Russian Law of Joint
Ventures of March 1995 sets the basic regulations on which joint ventures
between foreign companies and Russian companies are to operate. The law does not
limit a joint venture with regard to the presence of Russian or foreign capital.
The law also does not limit the foreigners' participation on Executive Boards or
other executive functions. The law states, however, that the economic and
financial activities of joint ventures are generally based on Russian law,
by-laws and regulations, provided that they do not contradict the basic
principals of international law.
Intertel XXI, the name of the actual joint venture entity, has 80% of
North-American capital and 20% of the Russian participation and, consequently,
is run by the Executive Board consisting of North-American members. This entity
does not violate the Russian laws of joint ventures.
The law of foreign investments provides, in theory, a proper protection for
investments and investors similar to the investment laws of European countries
such as France, Italy or Poland. In practice, however, the problems in the
implementation of the law could at times be complicated by the huge and often
corrupt bureaucratic apparatus of Russia. However, in the case of Intertel XXI,
the problem has been minimized because our partners are the leading
communication team in Russia that contain members that are senior officers in
the Ministry of Interior of the Russian Federation, whose primary responsibility
is to fight corruption.
At present, a marketing plan for the Company's Russian operations is being
developed in Moscow by Iskra Service, a prominent advertising and marketing
company in Moscow. The plan is to capture Industrial usage of long distance
needs; and commence the introduction of an economical pre-paid telephone card to
the general public.
<PAGE>
Our joint venture partners will assist in promoting and selling the pre-paid
card to all government agencies, through billboards, television media and print
media.
An extremely important feature of the Company's anticipated revenue stream is
that, after an initial introductory period, all sales will be prepaid by the
customers on a monthly basis and customers will be required to sign Usage
Commitment Contracts.
The Company is in the process of analyzing the long distance traffic between
Russia and Europe. However, there can be no assurance that any business will
develop in this market.
On the North American side, the Company has entered into a Maintenance and
Operating Agreement with Bridgepoint Enterprises Inc., a Montreal, Quebec
corporation. The contract commenced on March 1, 1999. Pursuant to the Agreement,
after the Company purchases the necessary equipment to establish a switching
center, Bridgeport will build and install the Company's center in its facility
and will continue to operate and maintain the center for a monthly fee of
$8,000. In April 1999, Bridgeport completed the installation of the Company's
equipment and the center became operational.
In June 1999, the Company entered into a one year renewable contract with
Metrocom, a closed joint stock company, to provide a Trans-Atlantic Fiber Optic
E-1 Line for dedicated circuits at an annual cost of $515,520. The contract
provides for the fee to be reduced if international tariffs for Trans-Atlantic
Lines decline. The Company currently anticipates that rates will decline by the
spring of 2000 due to world-wide market conditions. If this occurs, it should
lower the Company's expenses and ease the burden of its cash flow requirements.
The founders and principals of the Company believe that they have put together a
team having the experience and the extensive network of contacts to build and
operate a premier long distance service between the former Soviet Union
countries, North America and Europe. Their proven entrepreneurial record and
motivated energy will hopefully establish the Company as a prominent
telecommunications company, especially in the former Soviet Union countries,
resulting in a commercially successful enterprise.
The Company, including its Russian subsiiary, currently has three full time
employees and eight part time employees. The Company anticipates hiring ten
additional employees over the next six months. The Company does not expect to
incur any material costs in complying with environmental laws.
<PAGE>
Item 2. Plan of Operation.
Management's Discussion and Analysis
As noted in Item 1 above, the Company has installed its equipment and built the
network required for the first phase of its business objectives, its network
centers. The Company has begun the process of signing up users and anticipates
revenues to begin in May, 2000.
During 1999 the Company completed private offerings aggregating approximately
$1,200,000. The bulk of the proceeds were used to purchase and install equipment
for our facilities in Moscow and Montreal, Canada, to finance trips to develop
the Company's business in Russia, and network leasing costs.
The Company does not expect to conduct any product research and development and
we have purchased all the equipment we need to install in our current
facilities. The Company intends to retain marketing and public relations
consultants as necessary, and to hire additional staff if warranted by its sales
volume on an as needed basis.
As discussed above, the Company intends to expand its operations into St.
Petersburg once the Moscow facility is operational using cash flows generated by
the Moscow facility and additional financing. We have issued a purchase order
for the necessary equipment and anticipate installation to commence in the
summer of 2000. While the Company will not have to pay for the equipment for six
months and believes it will be able to pay for the equipment out of then
existing cash flows, the Company anticipates requiring approximately $125,000 to
finance startup costs for the new facility. The Company is planning an
additional private placement of up to $1,500,000. Total costs for each new
facility including equipment, installation, marketing and office personnel is
currently estimated at $300,000. The balance of this funding, if successful will
be utilized for advertising and marketing to address the retail prepaid phone
card market. To date, the Company has not spent any funds on any additional
facilities.
The Company's business plan currently calls for expansion into other markets,
such as Mexico, Cuba, India and Vietnam, if and when opportunities present
themselves and as funding permits. During the next twelve months, the Company
intends to use the same formula for financing any expansions, i.e., external
funding for startup costs and internal financing for operations. Other than as
described, the Company does not currently anticipate funding its growth with
additional public financings, except in the event an unexpected and unusual
opportunity is presented.
Year 2000 Disclosure
The Company only has a limited number of computers that it uses for mostly word
processing, bookkeeping and general administrative purposes. We do not believe
that we will be significantly effected by the "Year 2000 problem." In any event,
we have the ability to save all of our internal data on discs which will
preserve the data in the event problems occur with our system.
The Company has not experienced any Y2K problems during the first three months
of 2000 and does not, therefore, anticipate encountering any problems.
Item 3. Description of Property.
The Company maintains its corporate offices at 1155 University Street, Suite
602, Montreal, Canada where we have approximately 1,550 square feet at an annual
rental of US $24,000, including all utilities. The property is subleased from an
entity controlled by one of our directors by a two year lease expiring January
31, 2001. The sublet may be terminated by the Company at the end of any year
without penalty. Our Moscow facility is comprised of approximately 160 square
meters (approximately 1,750 sq.ft.) and is located at 19-7 Starovagankovski
Perealok, Moscow, Russia where we pay US$4,354 per month under a three year
lease. The Montreal property is leased from an entity controlled by Dr. Gerol
and Mr. Makarov, directors of the Company, at a rate the Company believes is the
going rate for similar space.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information as of January 31, 2000 regarding the
beneficial ownership of the Company's Common Stock, $.0001 par value, as of the
date hereof and after the Offering by (i) each person known by the Company to
own beneficially more than five percent of the Company's outstanding shares of
Common Stock, (ii) each director and executive officer of the Company who owns
shares and (iii) all directors and executive officers of the Company as a group.
Unless otherwise indicated, all shares of Common Stock are owned by the
individual named as sole record and beneficial owner with exclusive power to
vote and dispose of such shares. None of the people listed below owns any other
securities of the Company. There are no arrangements which may result in a
change in control of the Company.
<PAGE>
<TABLE>
<S> <C> <C>
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Shares Owned Beneficially Percentage
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Ilya Gerol (1) 2,508266 10.75%
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- -------------------------------------- --------------------------------- ---------------------------------
Viatscheslav Makarov (1) 2,508266 10.75%
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- -------------------------------------- --------------------------------- ---------------------------------
Derek Labell (1) 2,808,266 12.04%
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Michael MacInnis (1) 1,144,169 4.90%
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Natalia Maloshina (1) 2,000,000 8.57%
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Nais Corp. 1,297,401 5.56%
94 Washington Ave.
Lawrence, NY 11559
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- -------------------------------------- --------------------------------- ---------------------------------
Howard Salamon 1,767,401 7.58%
20 Margaret Ave.
Lawrence, NY 11559
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All Executive Officers and Directors 8,968,967 38.45%
as a Group
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</TABLE>
1 Uses Company's address.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
(a) Directors and Executive Officers.
Name Age Position
Dr. Ilya Gerol 59 Chairman
Derek Labell 39 Vice-President,
Director of Sales and
Marketing (North America)
Michael MacInnis 51 Chief Financial Officer
and Director
Viatcheslav Makarov 44 VP-Sales and Marketing
(Russia) and Director
Christian P. Richer 50 President and Director
Dr. Ilya Gerol: Chairman
<PAGE>
Dr. Ilya Gerol is an expert in communications with over 28 years of experience.
A Canadian of Russian descent, Dr. Gerol is Chairman of the Board of Directors.
He has consulted to the Economic Council of Canada, and has researched and
analyzed international information and economic trends, specializing in energy,
communications, and the world economy. From 1965 through 1973, Dr. Gerol was an
Editor, a Senior Editor, and then Editor-in-Chief of Radio Broadcasting
Atlantica International in Riga, Latvia (former Soviet Union). From 1973 to 1979
he was an Editor of SM Newspaper in Riga. From 1980 through 1981, he was an
associate teaching assistant at the University of British Columbia. From 1981
through 1984 he was a syndicated columnist at The Province Vancouver and an
associate Editor at the International Business Magazine. From 1984 through 1990
he was a Foreign Editor and Syndicated Columnist on international affairs and
international business at the Ottawa Citizen. From 1988 through 1991 he was a
visiting professor of Political Science at the State University of Winnipeg.
From 1991 to 1994 he was a consultant on Eastern Europe and Commonwealth of
Independent States to Economic Counsel of Canada for Amberoute International
Group. From 1994 to 1997 Dr. Gerol was vice president international, newsletter
D.A. & G. Information and Analysis and Editor-in-Chief. Dr. Gerol has been on
staff and/or visiting professor for over 14 universities throughout the world
including State University of Winnipeg, University of British Columbia, Moscow
State University, Hebrew University, and others.
Christian P. Richer, President and Director
Mr. Christian Richer is the President of the Company, and is an authority in the
field of telecommunications, and a marketing expert directed towards the
international marketplace. Mr. Richer has 25 years of experience with Bell
Canada and several of its many subsidiaries, working mostly in sales and
marketing. Recently he formed his own company, C2 Marketing International,
selling specialty telecommunications products. Mr. Richer brings to the Company
extensive international contacts. Mr. Richer has a D.E.C. diploma from the
University of Quebec.
Derek Labell: Vice-President and Director of Sales and Marketing (North America)
Mr. Derek Labell is Vice-President and Director of Sales and Marketing (North
America) and comes to the Company with over 20 years experience in sales,
marketing and management. Mr. Labell has an in-depth knowledge of the North
American telecommunications long distance telephone card market, including card
marketing, applications, production, distribution, franchising and card
application platforms. In 1994, Mr. Labell participated in the initial
groundwork to bring prepaid phone cards to Canada by conducting a comprehensive
study on behalf of a company which eventually became Canada's number one prepaid
phone card company. From 1986 to 1990 Mr. Labell was Director-Property
Management of The Marine Group's real estate division, Montreal, Quebec,
managing the real estate portfolio in Montreal, Windsor, Ontario and Fort
Lauderdale, Florida. From 1991 to 1993 he established a Limited Partnership,
operating foreign currency exchange offices in Montreal, Quebec for which he
negotiated the North American rights to sell and distribute the leading European
automated foreign currency exchange vending machine. During the same period he
was instrumental in concluding the acquisition of AVF, a carriage trade asset
management firm in Frankfurt, Germany. During 1994 he represented Pascals
Realties Ltd. leasing and managing their corporate office property in Old
Montreal. From 1995 to 1997 Mr. Labell provided consulting services to Monit
International Inc. (a privately held Montreal Real Estate company owning and
managing more than sixty properties throughout Eastern Canada and United States)
on leasing and tenant improvement construction issues. From 1997 to present he
has been director of leasing for Tidan, a privately held Montreal Real Estate
company owning and managing more than fifty properties throughout Eastern Canada
and in the United States.
Michael MacInnis: Chief Financial Officer
Mr. Michael MacInnis is the Chief Financial Officer. Mr.
MacInnis received his Chartered Accountant designation in 1972 and started his
own firm in 1974 where he specialized in corporate finance, income taxation and
reorganizations. In addition, he has operated and consulted to many corporations
throughout Canada and has successfully raised funding in excess of an aggregate
of $200 million for various commercial projects. Also, he specializes in Public
Corporations listed on the NASD Bulletin Board. During the last five years Mr.
MacInnis has focused his efforts on developing a franchised consulting concept
and providing consulting services to various companies seeking financing.
<PAGE>
Viatcheslav Makarov: Vice President and Director of Sales and Marketing (Russia)
Mr. Viatcheslav is Vice-President and Director of Sales and
Marketing (Russia). Mr. Makarov was trained as an engineer and his initial
career was as an avionics scientist in the former Soviet Union. From 1989
through 1995 he became the chief representative of Volvo (automotive) in Russian
and, as well, worked as a member of Renault bureau in Moscow. Since 1996, Mr.
Makarov moved to Canada where he established and currently operates, the
Interservice Group, a group of companies that consult to U.S., Canadian and
European business circles on financial and industrial development within Eastern
European and C.I.S. countries utilizing the many contacts and connections that
he has cultivated in the last ten years in both the Russian government and
industry.
(b) Significant Employees
Mr. Christian P. Richer is the President of the Company and currently its only
full time employee.
(c) Family Relationships
There are no family relationships among directors or executive officers of the
Company.
(d) Involvement in Certain Legal Proceedings.
None.
Item 6. Executive Compensation.
(a) General
Commencing April 1, 2000, Mr. Richer's salary is $90,000 per annum. Commencing
January 1, 1999, the Company has agreed to pay Dr. Gerol and Messrs. MacInnis
and Makarov an annual salary of $24,000. Mr. Labell receives the same salary
commencing May 1, 1999. Except for Mr. Richer, none of the Company's other
executive officers provide services on a full-time basis. No executive officer
or employee of the Company is paid more than $100,000 per year in salary and
benefits. Except for Mr. Richer, the Company does not currently provide any
benefits to its executive officers. A car and cellular telephone allowance
amounting to approximately $600 a month is expected to be provided for in Mr.
Richer's formal employment contract.
(b) Summary Compensation Table
SUMMARY COMPENSATION TABLE
Name and Other Long-term
Principal Position Year(1) Salary Bonus Compensation Compensation:Options
Dr. Ilya Gerol 1999 $4,000 0 0 0
Chairman & Chief
Executive Officer
Michael McInnis 1999 $4,000 0 0 0
Chief Financial Officer
& Director
Viatcheslav Makarov 1999 $4,000 0 0 0
VP-Sales and
Marketing (Russia)
& Director
Derek Labell 1999 0 0 0 0
Vice-President Sales
and Marketing
(North America)
<PAGE>
(1) Covers the period from inception (November 13, 1998) to the fiscal year
end on February 28, 1999.
(c) Options/SAR Grants Table
None.
(d) Aggregated Option/SAR Exercises and Fiscal Year End Option/SAR Value Table
None
(e) Long Term Incentive Plan ("LTIP") Awards Table
None
(f) Compensation of Directors
None
(g) Employment Contracts and Termination of Employment, and Change-in-Control
Arrangements
The Company has no written employment contracts with any of its executive
officers. However, the Company anticipates concluding a formal employment
agreement with Mr. Richer before April 30, 2000. The contract is expected to be
for one year and provide for an annual salary of $90,000, as well as stock
awards and options. There are no provisions for compensation to be paid to any
executive officer or director of the Company upon the termination of their
services by either party or by the actions of a third party.
(h) Report on Repricings of Options/SARs
None.
Item 7. Certain Relationships and Related Transactions.
The Company rents space in Montreal from Interservice Group which is owned by
two of the Company's directors, Dr. Gerol and Mr. Makarov. The lease is for two
(2) years at an annual rental of US$ 24,000. The Company believes the rent is at
fair market value. In December 1998, the Company entered into a four year
consulting agreement with Nais Corp., a shareholder, pursuant to which Nais
Corp. will provide financial and business public relations consulting services.
Item 8. Description of Securities.
(a) Common or Preferred Stock
The Company is authorized to issue 50,000,000 shares of Common Stock, $0.0001
par value, of which 23,327,032 shares were issued and outstanding as of January
31, 2000. Each outstanding share of Common Stock is entitled to one (1) vote,
either in person or by proxy, on all matters that may be voted upon the owners
thereof at meetings of the stockholders.
<PAGE>
The holders of Common Stock (i) have equal ratable rights to dividends from
funds legally available therefore, when and if declared by the Board of
Directors of the Company; (ii) are entitled to share ratably in all of the
assets of the Company available for distribution to holders of Common Stock upon
liquidation, dissolution or winding up of the affairs of the Company; (iii) do
not have preemptive, subscription or conversion rights, or redemption or sinking
fund provisions applicable thereto; and (iv) are entitled to one non-cumulative
vote per share on all matters on which stockholders may vote at all meetings of
stockholders.
Holders of Shares of Common Stock of the Company do not have cumulative voting
rights, which means that the individuals holding Common Stock with voting rights
to more than 50% of eligible votes, voting for the election of directors, can
elect all directors of the Company if they so choose and, in such event, the
holders of the remaining shares will not be able to elect any of the Company's
directors.
(b) Debt Securities.
The Company has not issued any debt securities to date. The Company has short
term loans of $100,000 of which, $90,000 are convertible, at the option of the
lender, into Common Stock.
(c) Other securities to be Registered
None.
PART II
Item 1. Market Price for Common Equity and Related Stockholder Matters.
(a) Market Information
There is no public trading market for the Company's securities. The Company has
$90,000 in short term loans that are convertible into its Common Stock. The
Company also has 600,000 warrants outstanding which are exercisable until
December 31, 2002 into Common Stock at a price of $1.00 per share. No
stockholder has any registration rights.
Of the 23,327,032 shares of common stock outstanding, 21,665,732 are currently
subject to the resale restrictions and limitations of Rule 144.
(b) Holders
There are 129 holders of the Company's common stock.
(c) Dividends
The Company has had no earnings to date, nor has the Company declared any
dividends to date. The payment by the Company of dividends, if any, in the
future, rests within the discretion of its Board of Directors and will depend,
among other things, upon the Company's earnings, its capital requirements and
its financial condition, as well as other relevant factors. The Company has not
declared any cash dividends since inception, and has no present intention of
paying any cash dividends on its Common Stock in the foreseeable future, as it
intends to use earnings, if any, to generate growth.
Item 2. Legal Proceedings
None
<PAGE>
Item 3. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
Item 4. Recent Sales of Unregistered Securities.
In November 1998, the Company sold 1,184,000 shares of common stock at a price
of $0.05 per share. All of such shares were sold to Canadian residents pursuant
to the exemption contained in Regulation S.
During the first part of 1999, the Company sold an aggregate of 1,661,300 shares
of common stock at a price of $0.50 per share. All of such shares were sold
pursuant to the exemption contained in Regulation D, Rule 504.
In February 1999, the Company issued 200,000 shares of restricted common stock
to Global Asset Management Fund as payment for financial consulting services.
These shares were issued pursuant to the exemption from registration contained
in Section 4(2) of the Act.
In June 1999, the Company issued 475,000 shares of restricted common stock to
2745-2515 QUEBEC INC., as payment for public relations services. These shares
were issued pursuant to the exemption from registration contained in Section
4(2) of the Act.
In November 1999, the Company issued 267,500 shares of restricted common stock
as payment for preparation of business plans and other related work. These
shares were issued pursuant to the exemption from registration contained in
Section 4(2) of the Act.
In November 1999, the Company issued 50,000 shares of restricted common stock to
a non-affiliate as interest payment for a loan to the Company. These shares were
issued pursuant to the exemption from registration contained in Section 4(2) of
the Act.
During the period commencing August 1, 1999 until January 31, 2000, the Company
sold 716,630 shares of restricted common stock at $0.50 per share in reliance on
exemption from registration under Regulation S and Regulation D, Rule 506.
In December the Company issued 600,000 warrants to purchase common shares to
9002-6493 Quebec Inc in lieu of payment for software programming provided to the
Company. The exercise price of the warrants is $1.00 per share.
No commissions or discounts were paid or given to any person or entity in any of
the Company's sales of securities. There were no underwriters or securities
brokers or securities dealers involved in the offering in any way; the shares
were sold by management on a best efforts basis.
<PAGE>
Item 5. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law, as amended, authorizes the
Company to Indemnify any director or officer under certain prescribed
circumstances and subject to certain limitations against certain costs and
expenses, including attorney's fees actually and reasonably incurred in
connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which a person is a party by reason of being
a director or officer of the Company if it is determined that such person acted
in accordance with the applicable standard of conduct set forth in such
statutory provisions. The Company's By-Laws extends such indemnities to the full
extent permitted by Delaware law.
The Company may also purchase and maintain insurance for the benefit of any
director or officer which may cover claims for which the Company could not
indemnify such persons.
PART F/S
The financial statements are included at the end of this Registration Statement,
prior to the signature page.
PART III
Item 1. Index to Exhibits.
<PAGE>
EXHIBIT
PAGE
2.1 Certificate of Incorporation*
2.2 By-Laws*
6.1 Lease for Montreal space*
6.2 Lease for Moscow space**
6.3 Joint Venture Agreement between V.I. Internet Telecommunications Inc.
and Specialized Technic and Communications of The Ministry of
Interior of Russian Federation*
6.4 Facilities Management Agreement with BridgePoint Enterprises
6.5 Agreement between Metrocom and V. I. Internet Telecommunications
Inc. to provide telecommunications services
27 Financial Data Schedule
- -------------------
* Previously filed
**To be filed by amendment
Item 2. Description of Exhibits.
2.1 Certificate of Incorporation
2.2 By-Laws
6.1 Lease for Montreal space
6.2 Lease for Moscow space
6.3 Joint Venture Agreement between V.I. Internet Telecommunications Inc.
and Specialized Technic and Communications of The Ministry of
Interior of Russian Federation
6.4 Facilities Management Agreement with BridgePoint Enterprises
6.5 Agreement between Metrocom and V. I. Internet Telecommunications
Inc. to provide telecommunications services
27 Financial Data Schedule
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Internet VIP, Inc.:
We have audited the accompanying consolidated balance sheet of Internet VIP,
Inc. (a Delaware corporation) and subsidiary as of February 28, 1999, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for the period from inception (November 13, 1998) to February 28,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Internet VIP, Inc. and
subsidiary as of February 28, 1999, and the results of their operations and
their cash flows for the period from inception (November 13, 1998) to February
28, 1999, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Company is in the
development stage and its continued existence is dependent on obtaining
additional financing for its operations. The Company's plans in regards to these
matters are also described in Note 1. In addition, the Company faces risks as a
development stage company. The success of the Company's operations is influenced
by these risks as more fully described in Note 1. These matters raise
substantial doubt about the Company's ability to continue as a going concern.
The accompanying financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the amounts
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
/s/Arthur Anderson, LLP
New York, New York
June 1, 1999
<PAGE>
INTERNET VIP, INC. AND SUBSIDIARY
(a development stage company)
CONSOLIDATED BALANCE SHEET
FEBRUARY 28, 1999
(in U.S. dollars)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 223,624
Other current assets 801
--------------
Total current assets 224,425
DEPOSIT ON ACCOUNT OF PROPERTY AND EQUIPMENT 25,000
--------------
Total assets $ 249,425
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses $ 68,258
--------------
Total current liabilities 68,258
--------------
STOCKHOLDERS' EQUITY:
Common Stocks, $0.0001 par value; 50,000,000 shares authorized; 20,874,800
shares issued and outstanding 2,087
Additional paid-in capital 498,090
Deferred compensation (100,000)
Accumulated deficit (219,010)
--------------
Total stockholders' equity 181,167
--------------
Total liabilities and stockholders' equity $ 249,425
==============
The accompanying notes are an integral part of this balance sheet.
<PAGE>
INTERNET VIP, INC. AND SUBSIDIARY
(a development stage company)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION
(NOVEMBER 13, 1998) TO FEBRUARY 28, 1999
(in U.S. dollars)
OPERATING EXPENSES:
Travels $ 95,447
Professional fees 84,337
Salaries and related expenses 14,667
Other 24,559
--------------
Total operating expenses 219,010
--------------
Net loss $ (219,010)
==============
BASIC AND DILUTED NET LOSS PER SHARE $ (0.01)
==============
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED 20,143,332
==============
The accompanying notes are an integral part of this statement.
<PAGE>
INTERNET VIP, INC. AND SUBSIDIARY
(a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION
(NOVEMBER 13, 1998) TO FEBRUARY 28, 1999
(in U.S. dollars)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Common Stock Additional Total
Number of Paid-in Deferred Accumulated Stockholders'
Shares Amount Capital Compensation Deficit Equity
BALANCE, November 13, 1998 - $ - $ - $ - $ - $ -
Issuance of common stocks to
founders 18,772,600 1,877 - - - 1,877
Issuance of common stocks in a
private placement ($0.05 per
share) 1,184,000 118 59,082 - - 59,200
Issuance of common stocks for
consulting services 200,000 20 99,980 (100,000) - -
Issuance of common stocks in
a private placement ($0.5
per share), net of
issuance costs of $20,000 718,200 72 339,028 - - 339,100
Net loss - - - - (219,010) (219,010)
------------ --------- ----------- ------------ ------------ -------------
BALANCE, February 28, 1999 20,874,800 $ 2,087 $ 498,090 $ (100,000) $ (219,010) $ 181,167
============ ========= =========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
INTERNET VIP, INC. AND SUBSIDIARY
(a development stage company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION
(NOVEMBER 13, 1998) TO FEBRUARY 28, 1999
(in U.S. dollars)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (219,010)
Adjustments to reconcile net loss to net cash used in operating activities
Changes in operating assets and liabilities-
Other current assets (801)
Accrued expenses 68,258
--------------
Net cash used in operating activities (151,553)
--------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposit on account of property and equipment (25,000)
--------------
Net cash used in investing activities (25,000)
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Stockholders' capital contribution, net 400,177
--------------
Net cash provided by financing activities 400,177
--------------
Net increase in cash and cash equivalents 223,624
CASH AND CASH EQUIVALENTS, beginning of period -
-------------
CASH AND CASH EQUIVALENTS, end of period $ 223,624
==============
NONCASH FINANCING ACTIVITIES:
Common stock issued for consulting services $ 100,000
==============
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
INTERNET VIP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1999
(in U.S. dollars)
INTERNET VIP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1999
(in U.S. dollars)
1. ORGANIZATION
Internet VIP, Inc. was incorporated in the state of Delaware on
November 13, 1998. Internet VIP, Inc. and its wholly owned subsidiary, V.I.
Internet Telecommunications, Inc., a Canadian corporation (together, the
"Company") were formed to sell long distance international telephone services
using the new technology, VIP-Voice over Internet Protocol. From its
strategically located switching center in Montreal, Canada, calls can be routed
from anywhere in North America to anywhere in the world using the Internet as
the main carrier. The first phase of operations will encompass calls from
Montreal to St. Petersburg and Moscow, and vice versa.
Initially Internet VIP Inc. will operate through its wholly owned
Canadian subsidiary corporation, V.I. Internet Telecommunications Inc. ("V.I.
Internet"). V.I. Internet will own and operate the Canadian switching centers.
Additionally, V.I. Internet will own 80% of a Russian joint-venture entity,
which was established to manage the Company's center in Moscow. The remaining
20% of the Russian joint-venture companies are owned by the Division of the
Russian Ministry of Interior.
The Company is in the development stage. It is not currently generating
any revenues from operations and is therefore dependent on external sources for
financing its operations. The Company completed, subsequent to February 28,
1999, a private placement. Subsequent net proceeds from the issuance of the
equity were approximately $450,000. Management expects these proceeds together
with its estimated revenues for the year ending February 28, 2000 to be
sufficient to finance the Company's operations through February 28, 2000.
However, there can be no assurance that the Company will succeed in executing
its plan and obtaining the financing necessary for its operations.
The Company faces risks as a development stage company. These risks include,
among others, uncertainty of product acceptance, sales and distribution risk,
competition, risk of errors, and quality and price of its products compared to
alternative products and service. Additionally, other factors such as loss of
key personnel could impact the future results of operations or financial
condition of the Company.
All of the aforementioned matters raise substantial doubt about the Company's
ability to continue as a going concern. The accompanying consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts and classification of liabilities that
might be necessary should the Company be unable to continue as a going concern.
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Internet VIP, Inc.
and its wholly owned subsidiary, V.I. Internet and its Russian joint-ventures.
Material intercompany balances and transactions have been eliminated in
consolidation.
<PAGE>
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Foreign Currency
The Company accounts for foreign currency in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation,"
for operating subsidiaries. The functional currency of the Company's wholly
owned subsidiary is the U.S. dollar.
Per Share Data
SFAS No. 128, "Earnings per Share," establishes new standards for computing and
presenting earnings per share (EPS). The standard requires the presentation of
basic EPS and diluted EPS. Basic EPS is calculated by dividing income available
to common shareholders by the weighted average number of shares of common stock
outstanding during the period. Diluted EPS is calculated by dividing income
available to common shareholders by the weighted average number of common shares
outstanding adjusted to reflect potentially dilutive securities.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
Fair Value of Financial Instruments
The carrying value of cash and cash equivalents approximates fair value.
Organizational and Development Costs
Organizational and development costs are expensed as incurred.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Under the asset and liability method of SFAS No.
109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement and tax
bases of assets and liabilities. Deferred tax assets and liabilities are
measured using tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Under
SFAS No. 109, the effect of a change in tax rates on deferred tax assets and
liabilities is recognized in income in the period in which the tax rate change
takes place.
<PAGE>
Recently Issued Accounting Standards
Additionally, in June 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information." This statement establishes standards for the way the public
business enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. This statement is effective for financial statements for periods
beginning after December 15, 1997, and need not be applied to interim periods in
the initial year of application. Comparative information for earlier years
presented is to be restated. The Company currently believes that it operates in
one segment and that the adoption of this statement will not have an impact on
the Company's financial statement.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value.
SFAS No. 133 requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. SFAS
No. 133 is effective for fiscal years beginning after June 15, 1999. The Company
currently does not use derivatives and, therefore, this new pronouncement is not
applicable.
3. PRIVATE PLACEMENT
In January 1999, the Company offered to sell, in a private placement, up to
1,900,000 shares of its Common Stock, $0.0001 par value, at a price of $.50 per
share, of which 718,200 shares were sold by February 28, 1999. Proceeds from the
offering are held in an unrestricted escrow account and transferable to the
Company upon demand. At February 28, 1999, $115,000 held in escrow are included
in cash and cash equivalents. Subsequent to February 28, 1999, the Company
issued an additional 943,100 shares in connection with this offering.
4. INCOME TAXES
At February 28, 1999, the Company has net operating losses available to offset
future income for book and tax purposes of approximately $200,000.
The loss carryforwards expire in February 2019. The annual utilization of these
loss carryforwards will be substantially limited if there are changes in the
Company's ownership.
The Company has provided a valuation allowance for the full amount of the tax
benefit associated with the loss carryforwards due to the uncertainty
surrounding their realization.
5. COMMITMENTS AND CONTINGENCIES
Lease Commitment
The Company leases office space from an affiliated company (an entity owned by
the Company's shareholders), for the period ending January 2001, under an
operating lease. Future minimum annual lease payments are as follows:
For the year ending February 28:
2000 $ 48,600
2001 44,550
----------
$ 93,150
Rent expense for the period from inception (November 13, 1998) to February 28,
1999 was $4,050.
Consulting Agreements
In December 1998, the Company entered into a four-year consulting agreement with
Nais Corp., a shareholder, according to which Nais Corp. will provide the
Company with financial and business public relations consulting services. Future
minimum annual fees are as follows:
For the year ending February 28:
2000 $ 72,000
2001 72,000
2002 72,000
2003 60,000
-----------
$ 276,000
In February 1999, the Company entered into a one-year consulting agreement with
Global Asset Management Group, Inc. ("Global Asset"), a Florida corporation.
According to the contract, Global Asset will provide the Company with financial
consulting services in consideration to 200,000 shares of the Company's common
stock, the fair market value of which was $100,000 at the date of the contract.
The Company recorded the consulting fees as deferred compensation, which will be
amortized over the contract period (one year).
Equipment Purchase Agreement
The Company purchased revenue generating equipment in the amount of $280,000, of
which $25,000 was paid in advance by February 28, 1999. The equipment was
received and installed by the Company subsequent to February 28, 1999.
<PAGE>
Facilities Management Agreement
In February 1999, the Company entered into a five-year agreement with
Bridgepoint Enterprises ("Bridgepoint"), according to which Bridgepoint will
provide the Company with facilities for its equipment as well as maintenance and
technical support for such equipment for variable monthly consideration. Future
estimated minimum annual fees are as follows:
For the year ending February 28:
2000 $ 96,000
2001 96,000
2002 96,000
2003 96,000
2004 96,000
------------
$ 480,000
Telecommunication Service Agreement
In June 1999, the Company entered into a one-year service agreement with
Metrocom, a Russian company, according to which Metrocom will provide
telecommunication services to the Company for a monthly charge of approximately
$40,000.
6. RELATED PARTIES
---------------
The Company received consulting services from a shareholder. Fees paid for such
services were approximately $14,000 in the period from inception (November 13,
1998) to February 28, 1999.
<PAGE>
BALANCE SHEET
INTERNET VIP, INC. AND SUBSIDIARIES
(A development stage company)
CONSOLIDATED BALANCE SHEET
AS OF MAY 31, 1999
(Unaudited)
(U.S. $)
ASSETS
CURRENT ASSETS
Cash and equivalents $ 227,452
Other current assets 9,444
--------------
Total current assets 236,896
PROPERTY AND EQUIPMENT 223,542
------------
TOTAL ASSETS $ 460,438
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 15,000
------------
Total current liabilities 15,000
STOCKHOLDERS' EQUITY
Common Stocks, $0.0001 par value; 50,000,000 shares
authorized; 21,922,895 shares issued and outstanding 2,192
Additional paid-in capital 1,022,032
Deferred compensation (75,000)
Accumulated deficit (503,786)
-------------
Total Stockholders' equity 445,438
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 460,438
=======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE BALANCE SHEET
<PAGE>
STATEMENT OF OPERATION
INTERNET VIP, INC. AND SUBSIDIARIES
(A development stage company)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MAY 31, 1999
AND FOR THE PERIOD
FROM INCEPTION (NOVEMBER 13, 1998) TO MAY 31, 1999
(Unaudited)
(U.S. $)
<TABLE>
<S> <C> <C>
For the
For the Three Period from
Months ended Inception to
May 31, 1999 May 31,1999
Operating Expenses
Management salaries and fee related expenses $ 36,040 $ 50,707
Marketing and advertising expenses 35,900 41,130
Travel 28,328 123,775
Professional fees 124,989 209,325
Amortization of deferred compensation 25,000 25,000
Other 34,519 53,849
---------------- -----------
TOTAL 284,776 503,786
---------------- ----------
Net loss for the period $ (284,776) $ (503,786)
========= =========
BASIC AND DILUTED NET LOSS PER SHARE (0.01)
======
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING
- Basic and diluted 21,500,981
==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
<PAGE>
CASH FLOWS
INTERNET VIP, INC. AND SUBSIDIARIES
(A development stage company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MAY 31, 1999
AND FOR THE PERIOD
FROM INCEPTION (NOVEMBER 13, 1998) TO MAY 31, 1999
(Unaudited)
(U.S. $)
<TABLE>
<S> <C> <C>
For the
For the Three Period from
Months ended Inception to
May 31, 1999 May 31,1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (284,776) $ (503,786)
Adjustments to reconcile net loss to net cash
used in operating activities
Amortization of deferred compensation 25,000 25,000
Noncash consulting fees 100,000 100,000
Changes in operating assets and liabilities
Other current assets (8,643) (9,444)
Accrued expenses (53,258) 15,000
-------- ----------
Net cash used in operating activities (221,677) (373,230)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (198,542) (223,542)
----------- -------------
Net cash used in investing activities (198,542) (223,542)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Stockholders' capital contribution, net 424,047 824,224
------------
Net cash provided by financing activities 424,047 824,224
---------- -----------
Net increase in cash and cash equivalents 3,828 227,452
CASH AND CASH EQUIVALENTS, beginning of period 223,624 0
--------- -------
CASH AND CASH EQUIVALENTS, end of period $ 227,452 $ 227,452
======= =======
NONCASH FINANCING ACTIVITIES:
Common stock issued for consulting services $ 100,000 $ 200,000
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
<PAGE>
NOTES
INTERNET VIP, INC. and SUBSIDIARIES
(a development stage company)
NOTES TO CONSLIDATED FINANCIAL STATEMENTS
AS OF MAY 31, 1999
(unaudited)
(U.S. $)
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the unaudited interim
financial statements furnished herein include all adjustments necessary for a
fair representation of the Company's financial position at May 31, 1999 and the
results of its operations and cash flows for the three-month period ended May
31, 1999. All such adjustments are of a normal recurring nature. Interim
financial statements are prepared on a basis consistent with the Company' annual
financial statements. Results of operations for the three-month period ended May
31, 1999 are not necessarily indicative of the operating results that may be
expected for the year ending February 29, 2000.
For further information, refer to the consolidated financial statements
for the fiscal year ended February 28, 1999 and notes thereto included in the
Company's Form 10-SB file with the Securities and Exchange Commission.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and disclosures of
contingent assets and liabilities at the dates of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
/s/Dr. Ilya Gerol
Dr. Ilya Gerol Chairman Date: April 6, 2000
/s/Michael MacInnis CFO and Director Date: April 6, 2000
Michael MacInnis (Chief Financial Officer)
/s/Christian Richer President and Director
Christian Richer (Chief Executive Officer) Date: April 6, 2000
/s/Viatscheslav Makarov VP-Sales & Marketing
Viatscheslav Makarov and Director Date: April 6, 2000
<PAGE>
LIST OF EXHIBITS
2.1 Certificate of Incorporation
2.2 By-Laws
6.1 Lease for Montreal space
6.2 Lease for Moscow space
6.3 Joint Venture Agreement between V.I. Internet Telecommunications Inc.
and Specialized Technic and Communications of The Ministry of
Interior of Russian Federation
6.4* Facilities Management Agreement with BridgePoint Enterprises
6.5* Agreement between Metrocom and V. I. Internet Telecommunications
Inc. to provide telecommunications services
27* Financial Data Schedule
* Filed herewith
EXHIBIT 6.4
VIP Internet Inc. Contract Data Summary
The Client customization form
January 5, 1999
Section 1: General Information
<TABLE>
<S> <C> <C>
------------ ---------------------------------------------- ---------------------------------------------------
Section Field Data
------------ ---------------------------------------------- ---------------------------------------------------
Full The Client Name VIP Internet Inc.
------------ ---------------------------------------------- ---------------------------------------------------
Effective Date - Day 1
------------ ---------------------------------------------- ---------------------------------------------------
Effective Date - Month February
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Effective Date - Year 1999
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
The Client Head-Office Address 1155 University street, suite 602, Montreal,
Quebec, Canada, H3B 3A7
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
The Client Inc. State or Province the state of Delaware
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Short The Client Name VIP Internet Inc.
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
RFS Date - Day 15th
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
RFS Date - Month March
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
RFS Date - Year 1999
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Term - Years Five (5)
------------ ---------------------------------------------- ---------------------------------------------------
Term - Renewal Period Yrs One (1)
------------ ---------------------------------------------- ---------------------------------------------------
Term - Termination Notice Three (3)
------------ ---------------------------------------------- ---------------------------------------------------
Term - Number of Renewals One (1)
------------ ---------------------------------------------- ---------------------------------------------------
Third Party Insurance $500,000
------------ ---------------------------------------------- ---------------------------------------------------
Country Region Canada
------------ ---------------------------------------------- ---------------------------------------------------
Site Street Address 1155 University street, suite 300
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Site City Montreal
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Site State/Province Site State/Province
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Site Portal Code H3B 3A7
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Site Country Canada
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Site Comment BridgePoint Center no. 1
------------ ---------------------------------------------- ---------------------------------------------------
Governing State province of Quebec
------------ ---------------------------------------------- ---------------------------------------------------
Client Notice Contact Data VIP Internet Inc.
1155 University street, suite 602
Montreal, Quebec, Canada
Canada
514-876-9222
Attention: Mr. Ilya Gerol
------------ ---------------------------------------------- ---------------------------------------------------
Client Failure Contact Name Mr. Ilya Gerol
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Client Failure Contact Telephone 514-876-9222
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Client Failure Contact Facsimile to be provided at a later time
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Client Failure Contact Pager to be provided at a later time
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Client NOC Contact Name to be provided at a later time
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Client NOC Contact Telephone to be provided at a later time
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
Client NOC Contact Facsimile to be provided at a later time
------------ ---------------------------------------------- ---------------------------------------------------
Client NOC Contact Pager to be provided at a later time
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
BPE First Contact Name Montreal Center Manager
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
BPE First Contact Telephone 514-878-1555
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
BPE First Contact Facsimile 514-878-1295
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
BPE First Contact Pager 514-994-6886
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
BPE NOC Contact Name BridgePoint NOC Manager
------------ ---------------------------------------------- ---------------------------------------------------
BPE NOC Contact Telephone 514-878-1555
------------ ---------------------------------------------- ---------------------------------------------------
BPE NOC Contact Facsimile 514-878-1295
------------ ---------------------------------------------- ---------------------------------------------------
------------ ---------------------------------------------- ---------------------------------------------------
BPE NOC Contact Pager 514-992-5862
------------ ---------------------------------------------- ---------------------------------------------------
------------ --------------------------------------------------------------------------------------------------
Section Summary of other changes to contract text
------------ --------------------------------------------------------------------------------------------------
------------ --------------------------------------------------------------------------------------------------
Deposit of 1 month to be applied to 13th month = $1,460
------------ --------------------------------------------------------------------------------------------------
------------ --------------------------------------------------------------------------------------------------
Advance payment of 3 months applied to first tree months = $5,380
------------ --------------------------------------------------------------------------------------------------
------------ --------------------------------------------------------------------------------------------------
All charges are in US currency 1.8 and 7.7 and Annex 3
------------ --------------------------------------------------------------------------------------------------
------------ --------------------------------------------------------------------------------------------------
3.2 BPE can be mandated to install
------------ --------------------------------------------------------------------------------------------------
------------ --------------------------------------------------------------------------------------------------
3.3 Equipment vendors can train
------------ --------------------------------------------------------------------------------------------------
------------ --------------------------------------------------------------------------------------------------
4.5 added reasonable care of equipment
------------ --------------------------------------------------------------------------------------------------
------------ --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Section 2: Pricing Data
<TABLE>
<S> <C> <C> <C>
------------ ---------------------------------------
Section Field
------------ --------------------------------------- ----------------------------
Charge - Total Monthly $1,460.00
------------ --------------------------------------- ----------------------------
------------ --------------------------------------- ----------------------------
Charge - Total Onetime $1,000.00
------------ --------------------------------------- ----------------------------
------------ --------------------------------------- ---------------------------- ----------------------------
Initial Term Renewal Terms
------------ --------------------------------------- ---------------------------- ----------------------------
------------ --------------------------------------- ---------------------------- ----------------------------
Charge - Cabinet Monthly $700.00 $900.00
------------ --------------------------------------- ---------------------------- ----------------------------
------------ --------------------------------------- ---------------------------- ----------------------------
Charge - Cabinet Onetime $500.00 $640.00
------------ --------------------------------------- ---------------------------- ----------------------------
------------ --------------------------------------- ---------------------------- ----------------------------
Charge - Square Foot Monthly $15.00 $18.00
------------ --------------------------------------- ---------------------------- ----------------------------
Charge - Square Foot Onetime $2.50 $3.00
------------ --------------------------------------- ---------------------------- ----------------------------
1 Cabinet (Lockable) per month $30.00 $40.00
------------ --------------------------------------- ---------------------------- ----------------------------
Charge - Tech Support On Site Off Site
------------ --------------------------------------- ---------------------------- ----------------------------
------------ -------------- ------------------------ ---------------------------- ----------------------------
Level 1 Business Hours $85.00 $115.00
------------------------ ---------------------------- ----------------------------
------------------------ ---------------------------- ----------------------------
Off-Hours $125.00 $150.00
------------ -------------- ------------------------ ---------------------------- ----------------------------
------------ -------------- ------------------------ ---------------------------- ----------------------------
Level 2 Business Hours $125.00 $150.00
------------------------ ---------------------------- ----------------------------
------------------------ ---------------------------- ----------------------------
Off-Hours $150.00 $175.00
------------ -------------- ------------------------ ---------------------------- ----------------------------
------------ --------------------------------------- ---------------------------- ----------------------------
Free Tech Support h/period One (2) week
------------ --------------------------------------- ---------------------------- ----------------------------
------------ --------------------------------------- ---------------------------------------------------------
Charge - Mileage/Km Rate $0.40/km
------------ --------------------------------------- ---------------------------------------------------------
------------ --------------------------------------- --------------------------- -----------------------------
Charge - Circuit Management: On-Site only (In Facility) Terminating outside Facility
------------ --------------------------------------- --------------------------- -----------------------------
------------ ---------------- ---------------------- --------------------------- -----------------------------
Monthly $15.00 $35.00
------------ ---------------- ---------------------- --------------------------- -----------------------------
------------ ---------------- ---------------------- --------------------------- -----------------------------
Onetime $50.00 $150.00
------------ ---------------- ---------------------- --------------------------- -----------------------------
------------ ---------------- ---------------------- ---------------------------------------------------------
DSX Monthly Charge $10.00
------------ ---------------- ---------------------- ---------------------------------------------------------
------------ --------------------------------------- ----------------- ------------------- -------------------
Charge - Supplemental Power: Generator 5KVA + 5KVA UPS + 5KVA
@ -48VD/C
------------ --------------------------------------- ----------------- ------------------- -------------------
------------ -------------------- ------------------ ----------------- ------------------- -------------------
15 amp circuit Cabinet 1 1 0
------------------ ----------------- ------------------- -------------------
------------------ ----------------- ------------------- -------------------
included per 20 Square Foot 1 1 0
------------ -------------------- ------------------ ----------------- ------------------- -------------------
------------ -------------------- ------------------ ----------------- ------------------- -------------------
Supplement Monthly $25.00 $70.00 $100.00
------------------ ----------------- ------------------- -------------------
------------------ ----------------- ------------------- -------------------
per 15 amp circuit Onetime $200.00 $200.00 $100.00
------------ -------------------- ------------------ ----------------- ------------------- -------------------
</TABLE>
<PAGE>
FACILITIES MANAGEMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made on this day 1 of February, 1999,
BETWEEN: 3407276 CANADA INC.,
operating under the name BRIDGEPOINT ENTREPRISES, a company duly constituted
under the laws of Canada, having its head office at 1155 University Street,
Suite 300, Montreal, Quebec, Canada, H3B 3A7(hereinafter referred to as
"BridgePoint")
AND: VIP Internet Inc., a company
duly constituted under the laws of
the state of Delaware, having its
head office at 1155 University
street, suite 602, Montreal, Quebec,
Canada, H3B 3A (hereinafter referred
to as "The Client")
WHEREAS, The Client has selected BridgePoint to house certain equipment required
for its communications network and to provide certain services in relation to
the operation and maintenance of the network; and
WHEREAS, The Client and BridgePoint desire to define the terms and conditions
under which BridgePoint is to house the equipment and provide facility
management services to the Client;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1: DEFINITIONS
In this Agreement, unless the context otherwise requires:
1.1 Agreement - means this agreement dated as of the date hereof, as
well as any rider, amendment, modification or intervention which
might be made or added thereto in writing; the Agreement is also
sometimes designated by the expressions "hereof", "herein" and
"hereunder";
1.2 Equipment - means the equipment and software provided by the Client
to be installed in the Facilities specified in Annex 1, as it may
be amended from time to time.
1.3 Facilities - means the floor space, lighting, air conditioning and
commercial electric power required for the accommodation and
operation of the Equipment.
1.4 Services - means the services and operations described in this
Agreement including in Annex 2, to be provided by the BridgePoint
in accordance with its methods and procedures manual, as they may
be amended from time to time.
1.5 Additional Services - means any services not included in the
Services as defined in article 3.1 above;
1.6 Site - means the premises at which the Services and Facilities are
to be provided.
1.7 Telecom - means the provider of telecommunications transmission
circuits to the Site.
1.8 Charges - means the amounts as set out in Annex 3 and payable to
BridgePoint by the Client. All
Charges presented in this agreement are in US currency.
1.9 Effective Date - means the date on which both parties shall have
signed this Agreement, however, if the parties sign it on different
dates, the later date shall be deemed the "Effective Date" hereof.
1.10 Ready-For-Service Date or RFS Date - means the date on which the
Site preparation is to be completed and the Facilities are ready to
accommodate the operation of the Equipment as defined in article 3.
ARTICLE 2: SCOPE
2.1 This Agreement is for the provision of the Site, Facilities, and
Services by BridgePoint to The Client.
2.2 The Site of the provision of the Facilities and Services
shall be the following Canadian locations:
1155 University street, suite 300
Montreal
Site State/Province
H3B 3A7
BridgePoint Center no. 1
ARTICLE 3: RESPONSIBILITIES OF BRIDGEPOINT
3.1 During the term of this Agreement BridgePoint shall perform the
Services as defined in Annex 2 hereof.
3.2 BridgePoint shall prepare the Site and provide the Facilities in
accordance with the Site Preparation Guidelines set forth in Annex
2 hereof for March 15th, 1999, herein referred to as the
"Ready-To-Service Date" or "RFS Date," unless otherwise agreed upon
by both parties in writing. Upon the completion by BridgePoint of
its site preparation obligations, The Client may conduct a site
survey of the Site to confirm the satisfactory completion of site
preparation in accordance with the Site Preparation Guidelines.
Thereafter, The Client shall provide and deliver the Equipment to
the Site, if this task is not mandated to BridgePoint. The Client,
or BridgePoint if mandated by the Client, shall install the
Equipment at the Site and the date of completion of such
installation shall henceforth be deemed the "Installation Date."
3.3 The Client, directly or through its Equipment suppliers, shall
provide training to BridgePoint during installation as follows. The
Client, or its Equipment suppliers, will provide sufficient
training to enable BridgePoint to perform first level maintenance
on the Equipment, also referred to in this document as Level 1
Technical Support. This is defined as participating in the
isolation and identification of hardware failures, and the
replacement of boards in the Equipment under the direction of The
Client. Training shall include but not be limited to:
i) familiarization with all Equipment controls and indicators;
ii) procedures for applying power or resetting the Equipment;
iii) procedures for replacing modules supplied by The Client and stored
at the terminal.
BridgePoint shall have a representative present during installation
in fulfillment of BridgePoint's obligation hereunder to undergo
training. The failure of said representative to attend installation
shall not be deemed sufficient reason to delay or defer
installation. However, the failure of BridgePoint to make a
representative available for such training shall obligate
BridgePoint to attend training at its own expense within sixty (60)
days of the Installation Date.
3.4 BridgePoint shall commence performance of the Services on the
Installation Date unless otherwise requested by The Client in
writing.
3.5 BridgePoint shall obtain all necessary governmental and other
approvals, certificates, and authorizations necessary to allow the
provision of the Site and Facilities, and the performance of the
Services under this Agreement. The Client shall obtain all
necessary governmental and other approvals, certificates, and
authorizations necessary to conducts its business in the Site and
Facilities.
3.6 Notwithstanding any other provision of this Agreement, if
BridgePoint is provided from The Client under this Agreement, any
equipment, software, technical data or specifications, or any
direct product thereof, BridgePoint shall not export, directly or
indirectly, to any other entity within the country of import or to
any country to which the Canadian Government, U.S. Government or
any agency thereof at the time of export requires an export license
or other governmental approval, without first obtaining the written
consent to do so from The Client and the Department of Commerce or
other agency of the Canadian or U.S. Government when required by an
applicable statute or regulation.
At the request of The Client, BridgePoint shall provide, if
required, end user certificates and all other documents required by
the Canadian or United States Department of Commerce, Office of
Export Administration from end users, such as a Written Assurance
Statement to said Departments of Commerce.
ARTICLE 4: TERM OF AGREEMENT, TERMINATION
4.1 The Initial Term of this Agreement shall be for Five (5) year(s)
from the Effective Date of this Agreement. After the expiration of
the Initial Term, this Agreement shall automatically renew for One
(1) subsequent One (1) year(s) Renewal Term(s). Either party may at
any time terminate the automatic renewal of this Agreement for any
reason during the Initial Term or any Renewal Term by providing a
Three (3) month(s)' written notice of termination to the other
party.
4.2 In the event that either party materially or repeatedly defaults in
the performance of any of its duties or obligations under this
Agreement and, within thirty (30) days after written notice is
given to the defaulting party specifying the default, (i) such
default is not substantially cured, or (ii) the defaulting party
does not obtain the approval of the other party to a plan to remedy
the default, then the party not in default may terminate this
Agreement by giving written notice to the defaulting party.
4.3 Notwithstanding the foregoing, BridgePoint may terminate the
Agreement by giving a written notice if The Client is in default of
making any payment hereunder for more than thirty (30) days from
the due date of such payment.
4.4 If either party becomes or is declared insolvent or bankrupt, is
the subject of any proceedings relating to its liquidation,
insolvency or for the appointment of a receiver or similar officer
for it, makes a general assignment for the benefit of all or
substantially all of it creditors, or enters into an agreement for
the composition, extension or readjustment of all or substantially
all of its obligations, then the other party, within the conditions
of applicable law, may immediately terminate this Agreement by
giving written notice.
4.5 Upon the termination of the Agreement, The Client will have thirty
(30) days to recuperate its Equipment at its own cost. The
Equipment is hereby granted as security to BridgePoint in order to
cover all amounts owed or which could be owed to BridgePoint under
this Agreement and The Client will only be allowed to recuperate
the Equipment upon full payment of all such amounts. The Client
undertakes to execute upon BridgePoint's request all documents
necessary to give effect to the security granted hereunder. If
required by BridgePoint, BridgePoint can disassemble and relocate
for safekeeping at the cost of The Client the Equipment until all
amounts due hereunder have been paid. In any event, BridgePoint
must agree in writing as to the timing and measures taken to
recuperate the Equipment. BridgePoint will take all reasonable
measures to protect the Equipment from harm, but BridgePoint will
not be responsible for any damage that could be done during the
removal of the Equipment in accordance with this Section.
ARTICLE 5: ACCESS TO SITE AND DATA
5.1 The Client and its duly authorized contractors, agents, and
employees may have access, twenty four (24) hours a day, seven (7)
days a week to the area of the Site where the Equipment is housed
and to all data and information available to BridgePoint relating
to the performance of this Agreement.
5.2 Access to the Site by The Client shall be contingent upon the
observance of BridgePoint's standard safety and security procedures
as defined in its Methods and Procedures Manuel.
ARTICLE 6: OWNERSHIP AND CONFIDENTIALITY
6.1 For the purposes of this Article, references to the Equipment
shall not be limited to the Equipment specified in Annex 1 but
shall also include any other Equipment which The Client may
provide to BridgePoint from time to time for the purposes of this
Agreement, in which event Annex 1 shall be deemed to be amended
accordingly.
6.2 The Client shall retain title to the Equipment and shall bear all
risks in relation thereto, unless loss or damage is due to the
negligence or willful misconduct of BridgePoint, its officers,
employees or agents.
6.3 BridgePoint shall take reasonable precautions for the security of
the Equipment and shall not alienate it or use it for purposes
other than purposes in relation to this Agreement.
6.4 BridgePoint shall maintain an inventory of the Equipment and,
unless already marked by The Client, mark the Equipment as
belonging to The Client.
6.5 The Client, by providing fifteen (15) days prior written notice
to BridgePoint may replace, remove, or dispose of any of the
Equipment as may be called for by its network requirements, in
which event Annex 1 shall be deemed to be amended accordingly.
<PAGE>
6.6 During the term of this Agreement, and for a period of three (3)
years after the expiration of the term of this Agreement,
proprietary or confidential information (Information) of any kind
pertaining to both parties' businesses, and all written Information
marked by ether party as "Confidential" or "Proprietary" shall be
treated by the the other party as secret and confidential and
accorded the same protection as the parties give to their own
Information of a similar nature. Verbally disclosed Information
which is to be treated as confidential or proprietary by a party
shall be confirmed as such in writing by the party within thirty
(30) days of such disclosure.
6.7 Notwithstanding the foregoing, Confidential Information does not
include information which:
6.7.1 has been published or is otherwise readily available to the
public other than by breach of this Agreement;
6.7.2 has been rightfully received by the Receiving Party from a
third party without breach of any confidentiality obligations;
6.7.3 has been independently developed by the Receiving Party's
personnel without access to, or use of, the other party's
Confidential Information;
6.7.4 was known to the Receiving Party prior to its first receipt
from the other party and which the Receiving Party has
documented prior to the date hereof; or
6.7.5 is required to be disclosed by law whether under an order
of a court or government, tribunal or other legal process.
In such cases, the Receiving Party must immediately notify
the other party of the disclosure requirement, in order to
allow the other party a reasonable opportunity to obtain a
court order to protect its rights, or otherwise to protect
the confidential nature of the Confidential Information.
ARTICLE 7: CHARGES
7.1 Commencing on the first day of the month immediately following the
month during which the Installation Date occurs and continuing
every month thereafter during the term of this Agreement, and
provided the Site and Facilities have been prepared and the
Services have been performed in accordance with the terms of this
Agreement, BridgePoint shall invoice The Client for the Facility
Management Charges stated in Annex 3 hereof. All Circuit Management
Charges, Customer Premises Service Call Charges, After Hours Call
Out Charges, and any other Charges authorized in advance in writing
by The Client shall be invoiced by BridgePoint in arrears in the
month following the month during which such Charges were incurred.
Facility Management Charges shall be invoiced by BridgePoint in
advance, in the month prior to the month during which such Charges
are to be incurred. The above Charges shall constitute The Client's
total liability for BridgePoint's provision of the Site,
Facilities, and Services and The Client shall have no obligation to
pay utilities or taxes or any other miscellaneous fees or expenses
arising from this Agreement.
7.2 All Additional Services will be invoiced monthly based on a time
and material basis. In the event third party services or materials
are required, the Client shall, in addition to the payment of the
cost thereof, pay to BridgePoint a fifteen percent ( 15 % )
management fee on such services and materials.
7.2 The Client shall pay all invoices complying with this Article
and Annex 3 within thirty (30) days of receipt.
7.3 During the term of this Agreement, and subject to BridgePoint's
written consent, which consent shall not be withheld unreasonably,
The Client may request that the amount or nature of Equipment to be
housed and maintained, or the nature or amount of Services to be
provided by BridgePoint be increased. Annex 1, Annex 2 and Annex 3
hereof shall be amended from time to time to reflect any such
increases.
7.4 Any amount past due by The Client to BridgePoint under this
Agreement shall bear interest from the due date until paid in full
at an annual rate of twenty percent (20%) or the maximum rate
allowed by law, whichever is greater.
7.5 The Client shall provide to BridgePoint advance payment equal to
three (3) months of all the Facility Management Charges on the
Effective Date of this Agreement. This advance payment shall be
applied against the first three (3) months' payments of this
Agreement.
7.6 The Client shall provide to BridgePoint a security deposit equal to
one (1) months of all the Facility Management Charges on the
Effective Date of this Agreement. This security deposit shall be
applied against the thirteenth (13th) months' payments of this
Agreement.
7.7 All charges in this agreement are stated in legal currency of the
United States of America.
ARTICLE 8: TAXES
BridgePoint shall assume responsibility for, and hold The Client
harmless from all taxes, duties, or similar liabilities arising
under this Agreement including but not limited to those arising
from BridgePoint's provision of space and Services with respect
thereto, under any present or future tax laws.
ARTICLE 9: LIABILITY, INDEMNITY, WARRANTIES, AND INSURANCE
<PAGE>
9.1 The Client shall indemnify BridgePoint and hold it harmless
against and in respect to any and all claims, damages, losses,
costs, expenses, obligations, liabilities, actions, suits,
including without limitation, interest and penalties, reasonable
attorneys' fees and costs and all amounts paid in settlement of
any claim, action or suit that may be asserted against
BridgePoint or that BridgePoint shall incur or suffer, that arise
out of, result from or relate to: (a) the nonfulfillment of any
agreement, covenant or obligation of The Client in connection
with this Agreement; (b) any breach of any representation or
warranty made by The Client hereunder; (c) any claim of any
nature whatsoever brought by any third person or entity who may
suffer damages of any sort as a direct or indirect result of
BridgePoint activities pursuant to the Agreement relating to or
in connection with the Equipment; or (d) any claims of
infringement that arise out of, result from or relate to any use
or misuse of the Equipment in connection with the provision of
the Services or Additional Services.
9.2 Furthermore, in the case where a claim of infringement is made
against BridgePoint as described in Section 14.1(d) above, The
Client must procure for BridgePoint the right to continue using the
Equipment or modify promptly the Equipment to make such use non
infringing. Until then, BridgePoint will not be required to render
the BridgePoint Services
9.3 BridgePoint warrants that it will perform its obligations under
this Agreement in a professional and workmanlike manner. In the
event BridgePoint is liable to The Client on account of
BridgePoint's performance or nonperformance of its obligations
under this Agreement, whether arising by negligence or otherwise,
(i) the amount of damages recoverable against BridgePoint for all
events, act or omissions will not exceed in the aggregate the
Charges paid by The Client for the last twelve (12) months and (ii)
in no event will BridgePoint be responsible for any indirect,
consequential, incidental or punitive damages of any party,
including third parties, or for lost profits. In connection with
the conduct of any litigation with third parties relating to any
liability of BridgePoint to The Client or to such third parties,
BridgePoint will have all rights to accept or reject settlement
offers and to participate in such litigation. Notwithstanding any
provision in this Agreement, BridgePoint will have no liability for
any loss or destruction of The Client's data beyond BridgePoint
obligations respecting safeguarding thereof. BridgePoint does not
warrant that the Installations and the BridgePoint Services or
Additional Services will permit the Equipment to function without
default or interruption. BridgePoint and The Client expressly
acknowledge that the limitations contained in this Section have
been the subject of active and complete negotiation between the
parties and represent the parties' agreement.
9.4 Subject to Articles 9.1, 9.2 and 9.3 hereof, both Parties shall be
responsible for damage to, or loss of their own property, both real
and personal, and that each shall be responsible for insuring his
own property, with an insurance policy providing extended coverage,
including but not limited to perils of fire together with insurance
against flood, theft, vandalism, malicious mischief, sprinkler
leakage and damage, and boiler and pressure vessel insurance. The
Client will also subscribe to and maintain additional insurance
covering damages for up to $500,000 to third party equipment and
personnel caused by the use of the Equipment and any other
insurance coverage which would seem appropriate in the context of
this Agreement. The Client shall furnish BridgePoint, upon request
to such effect, with certificates of insurance evidencing such
coverage.
ARTICLE 10: EXCUSABLE DELAY
10.1 If either party is unable to perform any of its obligations
hereunder due to Force Majeure, the failure to perform by such
party shall not constitute a basis for termination or default under
this Agreement provided that notice thereof is given to the other
party within seven (7) days after the party becomes aware of such
event. The Client shall not be required to make any payment to
BridgePoint pursuant to Article 7 during the period of
BridgePoint's inability, as a result of an event of Force Majeure,
to provide the Services and Facilities.
10.2 For the purposes of this Agreement, Force Majeure shall be
understood to be any cause beyond the reasonable control of the
non-performing party and without its fault or negligence and
includes, without limiting the generality of the foregoing, acts of
God or of the public enemy, acts of any Government or any State or
Territory, or any agency thereof, in its sovereign capacity, fires,
floods, epidemic, quarantine restrictions, unusually severe weather
conditions, extraordinary vehicle traffic conditions, or mechanical
malfunctions
ARTICLE 11: TRANSFERRING OF EQUIPMENT
11.1 BridgePoint can, during the term of this Agreement, require that
the Equipment be moved from any other area of the Facility where
the Equipment is located, to any other location in the Facility,
provided The Client has been notified thereto with a three (3)
months prior written notice. All reasonable fees and expenses for
such transfer will be assumed by BridgePoint.
11.2 If The Client requests the installation of additional Equipment in
the Facility, BridgePoint will be permitted to move the existing
Equipment in order to locate all the Equipment in the same area of
the Facility. In this case, all fees and expenses related to the
transfer of the Equipment in a new area of the Facility will be
assumed by The Client. The Client will also be responsible for any
damages created by the transfer of the Equipment.
11.3 Without limiting in any way the rights of BridgePoint described in
Section 11.1, BridgePoint will exert all reasonable efforts in
order to consult The Client with respect to the period during which
the transfer of the Equipment will be executed such that the
transfer will cause minimum interruption in the use of the
Equipment.
ARTICLE 11: ARBITRATION
All disputes, controversies, claims or differences which may arise
between the parties, out of or in relation to or in connection with
this Agreement, or for the breach thereof, shall be finally settled
by arbitration in Montreal, Quebec, Canada, pursuant to the
applicable provisions of the Code of Civil Procedure (Quebec),
except to the extent modified by the following provisions:
11.1 The matter shall be submitted to arbitration before an arbitrator
to be agreed upon by the parties. The arbitrator will be an expert
in the field of telecommunication.
11.2 If the parties cannot agree to a common arbitrator in a reasonable
amount of time, the matter shall be submitted to arbitration before
three arbitrators, the party requesting the arbitration (the
"Initiating Party") appointing one arbitrator, the other party (the
"Responding Party") appointing the second arbitrator and the third
arbitrator being jointly appointed by the first two arbitrators so
appointed;
11.3 The Initiating Party must send the Responding Party an arbitration
notice which shall specify the name of its designated arbitrator
and the matter to be arbitrated (the "Arbitration Notice");
11.4 Upon written request by one party to the other party, all matters
substantially identical or related to the matters identified in the
Arbitration Notice shall be heard and judged at the same time,
before the same arbitrators;
11.5 Within ten (10) days of the sending of the Arbitration Notice, the
Responding Party shall designate the second arbitrator and shall
provide his name to the Initiating Party. If no such appointment is
made within the stipulated period, the Responding Party shall be
deemed to have agreed that the arbitration board shall be composed
of a single arbitrator and to have recognised the independence and
impartiality of the arbitrator designated by the Initiating Party;
therefore, the arbitration board shall in such case be constituted
only of the arbitrator designated by the Initiating Party;
11.6 Subject to Section 11.5, the third arbitrator shall be designated
by the first two arbitrators within ten (10) days of the
designation of the second arbitrator failing which the designation
shall be made by a competent court at the request of any party to
the arbitration. The third arbitrator shall be a member of the
Quebec Bar;
11.7 The arbitration sessions shall be held in Montreal, Province
of Quebec.
11.8 The single arbitrator or arbitrators (either option defined as the
"Arbitration Board") shall have the power to establish their own
procedure and to impose monetary damages or penalties according to
the applicable rules of law and this Agreement;
11.9 The Arbitration Board shall render its decision in writing and
notify the parties thereof within forty-five (45) days following
the time at which the Arbitration Board reserves judgment;
11.10 The decision of the Arbitration Board shall be final and not
subject to appeal and shall be binding on the parties to the
arbitration, and the provisions of sections 946 and 946.6 inclusive
of the Code of Civil Procedure (Quebec) concerning the homologation
of arbitration awards shall be applicable; and
11.11 The arbitration fees and cost shall be borne by the party against
which the decision is rendered unless the Arbitration Board rules
otherwise.
ARTICLE 12: NOTICES
Any notice or communication under this Agreement shall be in
writing and shall be hand delivered, given by fax or sent by
registered mail return receipt requested, postage prepaid, to the
other party's designated representative, receiving such
communication at the address specified herein, or such other
address or person as either party may in the future specify to the
other party. Such notice shall be deemed to be received upon
delivery or, by fax, on the next business day following
transmission provided electronic evidence of transmission is
produced at point of origin or, if mailed, on the fourth business
day following the date of mailing.
If to The Client:
VIP Internet Inc.
1155 University street, suite 602
Montreal, Quebec, Canada
Canada
514-876-9222
Attention: General Counsel
If to BridgePoint:
BridgePoint Enterprises
1155 University, suite 300
Montreal, Quebec, Canada H3B 3A7
Attention: General Counsel
<PAGE>
ARTICLE 13: MISCELLANEOUS
13.1 Neither party may assign or transfer all or any part of its rights
under this Agreement, without the prior written consent of the
other, except when assigning all of their rights and obligations to
any legal entity controlling, controlled by, or under common
control with it, but with thirty (30) days' prior notice to the
other party.
13.2 BridgePoint can assign this Agreement or any obligations hereunder
to a third party. If any obligations of BridgePoint are assigned to
a subcontractor, BridgePoint will remain responsible for such
obligations under this Agreement.
13.2 This Agreement is not intended to create, nor shall it be construed
to be, a joint venture, association, partnership, franchise, or
other form of business relationship. Neither party shall have, nor
hold itself out as having, any right, power or authority to assume,
create, or incur any expenses, liability, or obligation on behalf
of the other party, except as expressly provided herein.
13.3 If any provision of this Agreement is held invalid, illegal or
unenforceable in any respect, such provision shall be treated as
severable, leaving the remaining provisions unimpaired, provided
that such does not materially prejudice either party in their
respective rights and obligations contained in the valid terms,
covenants, or conditions.
13.3 There are no intended third party beneficiaries to this Agreement.
13.4 The failure of either party to require the performance of any of
the terms of this Agreement or the waiver by either party of any
default under this Agreement shall not prevent a subsequent
enforcement of such term, nor be deemed a waiver of any subsequent
breach.
13.5 This Agreement may not be modified, supplemented, or amended or
default hereunder waived except upon the execution and delivery of
a written agreement signed by the authorized representative of each
party.
13.6 Both parties represent and warrant that each has the full authority
to perform its obligations under this Agreement and that the person
executing this Agreement has the authority to bind it.
13.7 This Agreement shall be governed by and construed in accordance
with the laws of the Province of Quebec and the applicable federal
laws of Canada therein, and the parties irrevocably attorn and
submit to the jurisdiction of the courts of the Province of Quebec,
city of Montreal
13.8 The Parties have requested that this Agreement and all documents
and communications pursuant to or in connection with this Agreement
be drawn up in the English language. Les Parties ont requis que
cette Convention ainsi que tous documents ou communications en
vertu de cette Convention ou s'y rapportant, soient rediges en
langue anglaise.
13.9 The provisions of Sections 4.5, 6.6, 6.7 and 9 shall survive the
expiration or termination of this Agreement for any reason.
13.10 This Agreement, together with the Exhibits hereto, constitutes the
final and full terms of understanding between the parties and
supersedes all previous agreements, understandings, negotiations,
and promises, whether written or oral, between the parties with
respect to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year set forth below.
BRIDGEPOINT ENTERPRISES VIP Internet Inc.
- -------------------------- ------------------------------
Signature Signature
- -------------------------- ------------------------------
Printed Name Printed Name
- -------------------------- ------------------------------
Title Title
Date Date
<PAGE>
ANNEX 1
EQUIPMENT SCHEDULE
Cabinet List (including Racks and Standalone Equipment)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------- ----------------------------------------- ---------- --------- -------- --------- --------- ------------
Reference Total Length Width Height Leased Preferred
Number Weight (inches) (Inches) (Feet) from Position
Description (Lbs) BridgePoin(Next
to
(Y/N) Cab.
Ref#)
- ------------- ----------------------------------------- ---------- --------- -------- --------- --------- ------------
- ------------- ----------------------------------------- ---------- --------- -------- --------- --------- ------------
Cabinet - Servers
Used to house AXI Voice Gateway no1,
C1 Site Keeper no 1 and IVR/Billing Server 150 28 28 7 Y Next to 2
no 1
- ------------- ----------------------------------------- ---------- --------- -------- --------- --------- ------------
- ------------- ----------------------------------------- ---------- --------- -------- --------- --------- ------------
Cabinet - Network & Mngmnt.
Used to house NetKeeper no 1, 10BaseT
C2 Hub no 1, Router No 1, CSU/DSU, Shared 150 28 28 7 Y Next to 1
console hub
- ------------- ----------------------------------------- ---------- --------- -------- --------- --------- ------------
- ------------- ----------------------------------------- ---------- --------- -------- --------- --------- ------------
Console - Management Interface
C3 Used as interface to all servers on 20 20 16 16 N In Control
site (Screen, mouse, keyboard) Room
- ------------- ----------------------------------------- ---------- --------- -------- --------- --------- ------------
- ------------- ----------------------------------------- ---------- --------- -------- --------- --------- ------------
Storage On-Site Standby Equipment Storage N/A N/A N/A N/A Y N/A
Location managed by BridgePoint
- ------------- ----------------------------------------- ---------- --------- -------- --------- --------- ------------
Equipment List (Rack or Cabinet Mountable, including Standalone Equipment)
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
UPS
Reference Total Total Total Total provided Location
Number Weight Amps BTU amps by (Cabinet
Description (Lbs) A/C -48V BridgePoint Ref
@ D/C (Y/N) #)
110V
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
E1 AXI Voice Gateways no 1 Y C1
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
E2 Site Keeper no 1 Y C1
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
E3 IVR/Billing Server no 1 Y C1
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
E4 NetKeeper no 1 Y C2
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
E5 10BaseT hub no 1 Y C2
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
E6 Router No 1 Y C2
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
E7 CSU/DSU no 1 Y C2
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
E8 Shared Console Hub Y C2
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
Shared Management Console (screen, In
E9 keyboard, mouse) Y control
room
- ------------- ----------------------------------------- ---------- --------- -------- --------- ----------- ----------
</TABLE>
<PAGE>
ANNEX 2
SERVICES AND FACILITIES
1. FACILITY MANAGEMENT SERVICES
1.1. Site Preparation Guidelines - BridgePoint is to prepare the Facilities
to its own standards and to meet the specifications outlined below:
1.1.1. Space
Provide adequate space for the Equipment layout defined
in the Client provided reference document entitled "Space
Layout Guidelines"; this document is attached to this
Agreement.
1.1.2. Electrical
Provide adequate power supply for the Equipment as
defined in the Client provided reference document
entitled "Power Requirement Guidelines"; this document is
attached to this Agreement.
<PAGE>
1.1.3. Air conditioning
Provide adequate heat dissipation capacity for the
Equipment as defined in the Client provided reference
document entitled "Air Conditioning Guidelines"; this
document is attached to this Agreement.
1.1.4. Additional Requirements
Prepare the site so that it also meet the Additional
Requirements as defined in the Client provided reference
document entitled "Additional Requirement Guidelines";
this document is attached to this Agreement.
1.2. Provision of Facilities - BridgePoint is to secure and maintain the
Facilities to include space, electricity, UPS, air conditioning and
access control.
1.3. Spare Parts Storage - BridgePoint shall be responsible for the storage
of all spare parts, which The Client shall provide free of charge to
BridgePoint. Such spare parts shall be utilized exclusively as
replacement parts in performing repair of the Equipment (Equipment
Repair). In those cases where BridgePoint removes damaged parts from
the Equipment in conducting Equipment Repairs, BridgePoint shall
package and send said parts to a The Client-designated repair facility.
The Client shall be responsible for the reasonable shipment expense
incurred by BridgePoint. The Client understands spare part storage
capacity is proportionate to the space occupied by the Equipment in
the Facility.
1.4. Site Documentation - BridgePoint shall maintain site communication and
updated site configuration documentation, to include information about
the Equipment, spare parts, telephone circuits and customer port
assignments. A copy of this documentation will be kept accessible to
the Equipment, and a copy will be provided to The Client.
1.5. Daily Inspections - BridgePoint shall carry out routine visual
inspection daily during business days to determine whether there is
evidence of malfunction, such as non-working indicator lights or
meters, smoke, fire or unusual noise emission, and will provide
maintenance and remedy therefor.
In those cases where The Client is the first party to become aware of
failure of the Equipment, The Client shall notify BridgePoint as
follows:
Montreal Center Manager
514-878-1555
514-878-1295
514-994-6886
In those cases where BridgePoint is the first party to become aware of
failure of the Equipment, BridgePoint shall notify The Client as
follows:
24 hours - 7 days/week:
to be provided at a later time
to be provided at a later time
to be provided at a later time
to be provided at a later time
2. TECHNICAL SUPPORT
BridgePoint shall make a technician available, upon Customer's
request, to provide assistance with respect to the Equipment in the
Facility 24 hours a day, 7 days a week. Assistance shall be invoiced
at either Level I or Level II charges, as determined by BridgePoint in
consideration of the complexity associated with the work order
presented by the Client.
2.1. TECHNICAL SUPPORT LEVEL I
Level I support includes all work orders that do not require operating
knowledge of a customer's platforms or coordination with network
operators. Support Level I consists of the following types of
intervention:
2.1.1. Responding to questions from the Client as to status of visual
displays on the Equipment.
2.1.2. Manipulating external switches on the Client's Equipment, as
directed by the Client.
2.1.3. Providing the Client authorized subcontractors with controlled access
to the Client Area.
2.1.4. Removing or replacing components and cards ("Components") identified
by the Client in the Client's Equipment, as directed by the
Client and to the extent such work can be performed without tools
or specialized knowledge by the representatives of BridgePoint.
2.1.5. Moving patch cords or plugs on the Client's Equipment, as directed
by the Client.
2.1.6. Typing simple commands on a typewriter-style keyboard on the Client's
Equipment, as directed by the Client. BridgePoint shall be the sole
judge of whether a command is simple or not.
2.1.7. Packaging small parts, such as circuit packs, for shipment and call
any applicable shipper to pick-up the package, as directed by the
Client and all costs related thereto to be borne by the Client.
2.2. TECHNICAL SUPPORT LEVEL II
Level II Support shall apply when the BridgePoint technician must
manipulate the Equipment without step by step directions from the
Client or when BridgePoint is requested to act as a representative of
the Client with third parties. Support Level II includes, but is not
limited to:
2.2.1. Co-ordinations of circuit adds, moves and deletes with the Client and
third party suppliers.
2.2.2. Representing the Client as a local contact for suppliers.
2.2.3. Assisting the Client in testing or replacing Equipment components
2.2.4. Configuring the Equipment without step by step guidance from the Client
2.2.5. Troubleshooting performance issues on the Equipment or on circuits
connected to it.
2.3. SCHEDULE FOR BRIDGEPOINT TECHNICAL SUPPORT SERVICES
BridgePoint shall respond to The Client's requests for technical
support within one (1) hour of notification from The Client during
Business Hours, from 0900 to 1700hrs on business days. During
Off-Hours, from 17h01 to 08:59hrs, BridgePoint shall respond to The
Client's requests for technical support within two (2) hours of
notification from The Client.
2.4. AFTER HOURS TECHNICAL SUPPORT
For After Hours Technical Support, defined as those calls placed
between 1701hrs and 0859hrs local time, requests shall be directed to
BridgePoint by the Client as follows:
BridgePoint NOC Manager
514-878-1555
514-878-1295
514-992-5862
2.5. OFF-SITE SERVICE CALLS
BridgePoint shall make service calls to The Client's customers or to
other locations where the Client maintains equipment or Telecom
circuits as may be reasonably requested by The Client from time to
time. The time of these service calls will be coordinated with
BridgePoint, The Client and the customer.
2.6. CIRCUIT MANAGEMENT SERVICE
Circuit management can be given as a responsibility to BridgePoint for
individual circuits or for all circuits terminating on the Equipment.
This management service includes circuit order processing,
facilitating Telecom installation at the Facilities and circuit
maintenance.
2.7. SPECIFIC TECHNICAL SUPPORT MANDATE
BridgePoint will execute specifically defined procedures and
operational functions for the Client as specified in contract
Addendums entitled "Technical Support Mandate Addendum"; these
documents are attached to this Agreement.
<PAGE>
ANNEX 3
CHARGES
1. Facility Management Charges
The Client shall pay BridgePoint the sum of $1,460.00 per month during the
Initial Term for the provision of the Facility Management Services set forth
in Article 1 of Annex 2 hereof and the associated, one-time, installation
charges of $1,000.00.
These charges reflect the application of the rate tables below to the
Equipment described in Annex 1.
1.1. Space:
<TABLE>
<S> <C> <C>
Type of space leased Initial Term Renewal Terms
--------------------------------------------------------- ------------------------- -------------------------
1 Cabinet space per month $700.00 $900.00
--------------------------------------------------------- ------------------------- -------------------------
--------------------------------------------------------- ------------------------- -------------------------
1 Cabinet space installation (onetime) * $500.00 $640.00
--------------------------------------------------------- ------------------------- -------------------------
--------------------------------------------------------- ------------------------- -------------------------
1 Square Foot per month $15.00 $18.00
--------------------------------------------------------- ------------------------- -------------------------
1 Square Foot installation (onetime) $2.50 $3.00
--------------------------------------------------------- ------------------------- -------------------------
--------------------------------------------------------- ------------------------- -------------------------
1 Cabinet (Lockable) per month $30.00 $40.00
--------------------------------------------------------- ------------------------- -------------------------
* The Client provides its own secure Equipment mounting solution, preferably a
lockable cabinet. The Client can also lease a cabinet from BridgePoint (see last
item).
1.2. Power:
----------------------------------------------- -------------------- ---------------------- -----------------
Included Power Generator Only Generator + UPS -48VD/C
----------------------------------------------- -------------------- ---------------------- -----------------
--------------------- ------------------------- -------------------- ---------------------- -----------------
15 amp circuit 1 Cabinet 1 1 0
------------------------- -------------------- ---------------------- -----------------
------------------------- -------------------- ---------------------- -----------------
included per 20 Square Foot 1 1 0
--------------------- ------------------------- -------------------- ---------------------- -----------------
----------------------------------------------- -------------------- ---------------------- -----------------
Supplemental Power Charge Generator Only Generator + UPS -48VD/C **
----------------------------------------------- -------------------- ---------------------- -----------------
-------------------------- -------------------- -------------------- ---------------------- -----------------
Supplement Monthly $25.00 $70.00 $100.00
-------------------- -------------------- ---------------------- -----------------
-------------------- -------------------- ---------------------- -----------------
per 15 amp circuit Onetime $200.00 $200.00 $100.00
-------------------------- -------------------- -------------------- ---------------------- -----------------
** is BridgePoint Facilities where D/C power is available
</TABLE>
All charges are legal currency of the United States of America.
<PAGE>
2. Circuit Management Charges
For all circuits paid for by The Client where BridgePoint management is
requested, a Circuit Management Service fee will be charged for coordination
functions provided, in-Facility wiring and the use of conduit capacity.
<TABLE>
<S> <C> <C> <C>
Type of circuit managed
------------------------------- -----------------------------------
On-Site only (In Facility) Terminating outside Facility
------------------------------- -----------------------------------
--------------------------- ------------- ------------------------------- -----------------------------------
Circuit Management Monthly $15.00 $35.00
--------------------------- ------------- ------------------------------- -----------------------------------
--------------------------- ------------- ------------------------------- -----------------------------------
Onetime $50.00 $150.00
--------------------------- ------------- ------------------------------- -----------------------------------
--------------------------- ------------- -------------------------------------------------------------------
Use of BridgePoint DSX Monthly $10.00
Charge
--------------------------- ------------- -------------------------------------------------------------------
</TABLE>
All leased lines (circuits) paid for by BridgePoint on behalf of The Client in
the performance of Circuit Management Services under this Agreement shall be
invoiced monthly to The Client by BridgePoint at cost plus 15% to cover
expenses incurred.
3. In-Facility and Off-Site Technical Support Charges
For each in or off-site service call performed by BridgePoint in accordance
with Article 2 of Annex 2 hereof, The Client shall pay BridgePoint the hourly
rate presented in the table below plus $0.40/km for the distance from
BridgePoint's place of business to the off-site location in the case of
off-site calls.
<TABLE>
<S> <C> <C>
----------------------------------------- ----------------------------- ---------------------------
Service Call charges In Facility (On Site) Off Site
----------------------------------------- ----------------------------- ---------------------------
---------------- ------------------------ ----------------------------- ---------------------------
Level 1 Business Hours $85.00 $115.00
------------------------ ----------------------------- ---------------------------
------------------------ ----------------------------- ---------------------------
Off-Hours $125.00 $150.00
---------------- ------------------------ ----------------------------- ---------------------------
---------------- ------------------------ ----------------------------- ---------------------------
Level 2 Business Hours $125.00 $150.00
------------------------ ----------------------------- ---------------------------
------------------------ ----------------------------- ---------------------------
Off-Hours $150.00 $175.00
---------------- ------------------------ ----------------------------- ---------------------------
----------------------------- ---------------------------
Minimum Hours charged 1/2 h 1 h
----------------------------------------- ----------------------------- ---------------------------
----------------------------- ---------------------------
Billing Increment (Hours) 1/4 h 1/2 h
----------------------------------------- ----------------------------- ---------------------------
</TABLE>
During the Initial and Renewal Terms the Client will receive One (2) hour of
Technical Support Level I free of charge per week. These free hours are
non-cumulative across periods.
All charges are legal currency of the United States of America.
EXHIBIT 6.5
AGREEMENT
METROCOM
AGREEMENT FOR PROVISION OF TELECOMMUNICATION SERVICES
of June 09, 1999
Closed joint stock company METROCOM (hereafter referred to as "METROCOM") in the
person of R. U. Khalikov, General Director, acting in the strength of the
Charter and VI Internet Telecommunications Inc. (hereafter referred to as
"Customer") in the person of Derek J. Labell, CEO, acting in the strength of
Charter, have made this Agreement to the following
1. SUBJECT OF AGREEMENT
METROCOM will provide telecommunication services (hereafter referred to as "the
Service") to Customer in accordance with the terms and conditions below. The
Service type, specifications and performance standards are defined in Exhibit B
to this Agreement.
2. TERM OF AGREEMENT
The Term of the Agreement shall commence on the date of its signing by the
Parties and shall continue thereafter to the expiration of the Service Term as
defined in paragraph 3.3 and in Supplementary Agreements.
3. SERVICE
3.1. Service Description:
<TABLE>
<S> <C> <C> <C> <C>
- ------- ----------------------------------------------- ----------- ------------- -------------------------
N Service Interface Installation time
Service ----------
Type
- ------- ----------------------------------------------- ----------- ------------- -------------------------
- ------- ----------------------------------------------- ----------- ------------- -------------------------
1 International transmission circuit "Russia, E1 G.703 4 weeks
</TABLE>
Moscow, Metrocom POP - Canada, Montreal,
Quebec, Teleglobe Canada POP" (full circuit)
Circuit Identifier:
Moscow/MTC - Montreal/Teleglobe NP1
Installation date above is subject to the condition that not later than twenty
(20) days before the commencement of the Service Term the Customer will pay
one-time non-recurring fee and one month monthly recurring fee according to
articles 4.1, 4.2 of Agreement to METROCOM.
3.2. Service Term
The Initial Term for the Service is one (1) year from the date of execution of
the Work Acceptance Certificate by the Parties. Not later than () days before
expiration of the Initial Term, Customer may request a renewal term under the
same terms and conditions. If METROCOM does not receive the appropriate
notification from Customer, the Agreement shall be deemed terminated for
particular Service and METROCOM will have the right to disconnect Customer from
METROCOM network.
3.3. Service Expansion and Renewal
Additional services requested by Customer shall be executed as Exhibits that
shall be an integral part of this Agreement when signed by the Parties.
4. PAYMENTS
4.1 Installation Charge
The Customer agrees to pay METROCOM a one-time non-recurring fee equivalent to
USD 7,500 (Seven thousand five hundred US Dollars) plus VAT (20%). Customer will
be billed for the Installation Charge with the commencement of the Term of the
Agreement 4.2 Monthly Recurring Charge for E1(2,048 Mbps) Service
The Customer agrees to pay METROCOM for use of the Service the monthly
recurring fee in amount equivalent to USD 35,800 (Thirty five thousand eight
hundred US dollars)plus VAT (20%). Customer will be billed for recurring charge
on month in advance basis during the entire Service Term.
4.3. Terms of Payment
All amounts due under the present Agreement are payable in US dollars. All
amounts indicated above and any other payments including VAT and other taxes and
fees imposed according to the legislation in force under this Agreement and any
Additional Agreements to it are due and payable by Customer within 15 days from
the date of invoice receiving from METROCOM. Late payments will be subject to a
late payment charge computed by 0.05% for each day after the due date until the
date of payment. If Customer has not paid the Monthly Recurring Charge within 60
days METROCOM can switch off the services. Reconnection will be performed after
Customer's full payment of due amount. The structure of payments is provided in
Exhibit D to this Agreement.
5. METROCOM RESPONSIBILITIES
5.1 METROCOM will provide Customer with the Services described in Section 3 and
will maintain their performance within the limits detailed in Exhibit B
("Service Description and Performance Standards"). 5.2. METROCOM will use
reasonable efforts to repair and maintain the Service as a result of any
failure, interruption or impairment which requires immediate remediation.
METROCOM will provide trouble clearance notification to Customer assigned
technical representatives upon resolution.
5.3. Customer may request changes or modifications to the Service by delivering
to METROCOM a notice detailing the maintenance requirements and a preferred time
for completing such work. METROCOM will perform changes or modifications with
prior notification to Customer of the price and date of such maintenance.
Service modification does not involve change in the Service type.
5.4. METROCOM will from time to time schedule and perform without interruption
to the Service required maintenance tests, repairs, and adjustments which are
necessary to maintain the Service performance. When interruption is necessary,
METROCOM will provide Customer at least forty-eight (48) hours advance notice of
such work.
5.5. Customer shall be entitled to credit for any period of thirty (30) minutes
and more when the Service remains unavailable according to definitions of
Exhibit B unless the interruption is caused by the acts of Customer or is
expressly permitted by this Agreement. The credit shall be equal to the amount
charged to Customer for delivering the Service during the interruption period
calculated by 30 minute increments. No credit shall be allowed for interruptions
less than 30 minutes long or for any time required to make tests or adjustments
of the equipment.
Note: If Customer fails by any reason to provide access for METROCOM staff
to the equipment for trouble examination and resolution at any time
including night time, weekends and holidays, the interruption credit
is calculated as from the moment of actual METROCOM access to the
equipment.
6. CUSTOMER RESPONSIBILITIES
6.1. Customer agrees to send signed Work Acceptance Certificate or motivated
Work Acceptance rejection within ten (10) days from the date of receiving of
Work Acceptance Certificate from METROCOM. If Customer within defined period
would not sign Work Acceptance Certificate and would not present motivated
rejection METROCOM has the right to draw up unilateral Work Acceptance
Certificate, which would be the reason for payments by this Service Agreement.
6.2. Customer will bear all expenses for connecting additional equipment
required for matching the provided channels with the equipment used by Customer.
6.3. Customer may use the Service for any purpose permitted by the Russian Laws,
for which it is intended, provided that Customer will not use the Service so as
to interfere with or impair service over any of the facilities and associated
equipment comprising the METROCOM network and associated equipment, or to impair
the privacy of any communications over the METROCOM network facilities and
associated equipment. 6.4. Customer shall not perform any maintenance and repair
to METROCOM equipment or facilities, and Customer shall prohibit the access of
unauthorized persons to the Service and equipment. Customer shall immediately
report any failure, interruption or impairment of the Service to the METROCOM's
ITMC at +7 812 118-3288.
7. OWNERSHIP
Customer agrees that all rights, title and interest in the transmission
equipment and associated materials provided by METROCOM hereunder shall at all
times remain exclusively with METROCOM. Customer shall not create or permit to
be created any violation of property rights for METROCOM's equipment. Upon
termination of Service, METROCOM shall have the right, but not the obligation,
to remove all METROCOM facilities from any applicable premises
8. CANCELLATION OF AGREEMENT
8.1. Customer may cancel this Agreement before commencement of the Service Term
by reimbursing to METROCOM within thirty (30) days for all expenses incurred
with installation of the Service. 8.2. Customer may cancel this Agreement after
commencement of the Service Term provided the Customer has paid all charges to
date, by delivering to METROCOM a cancellation payment equal to 25% of aggregate
monthly payments for the remaining part of the Term of the particular Service
8.3. Either party may cancel the Agreement in the event of default. The
following events will be events of default under this Agreement: (a) failure by
Customer to pay any sum payable under this Agreement in the agreed amount within
sixty (60) calendar days from the due day of payment as stipulated in Paragraph
4.3 of this Agreement; (b), failure by either party to perform any non-monetary
obligation under this Service Agreement within thirty (30) days after notice
from the other party specifying the failure or within such additional period
agreed by both Parties as reasonably necessary to cure such failure if the
failure cannot be cured within thirty (30) days. Upon occurrence of an event of
default, the non-defaulting party may terminate the Agreement. Upon termination,
all of Customer's rights to the Service shall immediately cease.
9. WARRANTY AND LIABILITY
The Interruption Credit described above in paragraph 5.5 shall be METROCOM's
sole obligation and Customer's sole remedy for any loss or damage sustained as a
result of any interruption or failure of the Service, any facilities used in
providing the Service, or for any error, omission or delay for any reason.
METROCOM makes no warranty of merchantability or fitness for a particular
purpose with respect to the service or any equipment provided under this
Agreement. In no event shall METROCOM be liable to Customer or any third party
for any indirect, special or consequential damages including, without
limitation, those based on loss of revenues, profits, or business opportunities,
whether or not METROCOM had or should have had any knowledge, actual or
constructive, that any such damages might be incurred.
10. ASSIGNMENT
Neither party may assign this Agreement to a third party without the express
written consent of the other party, except (a) to any subsidiary, parent company
or affiliate or (b) pursuant to any sale of all the business related to this
Service Agreement.
11. CONFIDENTIALITY
If either party provides confidential information to the other in writing and
identified as such, the receiving party shall protect the confidential
information from disclosure to third parties with the same degree of care
accorded its own confidential and proprietary information, except that neither
party shall be required to hold confidential information which becomes publicly
available other than through the recipient or which is required to be disclosed
by a state or judicial order or which is independently developed by the
disclosing party. Confidentiality obligations shall survive for a period of one
(1) year following expiration or termination of this Agreement. If the parties
have entered into a Confidentiality Agreement, its terms and obligations shall
be in addition to the terms and obligations of this Paragraph.
12. NOTICES
All notices shall be in writing and addressed as provided in Paragraph 17 of
this Agreement. Notices forwarded by delivery service (courier service or by
registered mail) shall be deemed given five (5) days after documented delivery
to the appropriate service, or if by facsimile, on the date indicated on the
receiving party's transmitted copy. The notice delivered by messenger shall be
deemed given on the date inscribed on its copy by the receiving party staff
Note: Repeated notices if requested by either party shall be forwarded under
cash on delivery terms.
13. SETTLEMENT OF DISPUTES
If the Parties are unable to independently resolve any dispute pursuant to this
Service Agreement, the dispute shall be settled by the Arbitration Court of the
Chamber of Commerce of the Russian Federation.
14. FORCE MAJEUR
The parties will not be held responsible for partial or complete failure to
execute provisions of this Service Agreement if such failure is caused by acts
of fire, flood, earthquake, war, ban of export or import, higher than acceptable
level of radiation or any other cause considered by International Arbitration as
Force Majeur as long as this acts were immediately affecting execution of the
Agreement. The fulfillment of obligations under this Agreement by the Parties
shall be extended correspondingly for a period during which such circumstances
last. Shall Force Majeur circumstances or its consequences continue for 4 (four)
months the Parties agree to meet to discuss appropriate measures. However, if
during the following 2 (two) months the Parties will not resolve the related
issues each party has the right to refuse from further execution of the
obligations under this Agreement and neither of the Parties will have the right
for reimbursement of any possible damages by the other Party.
15. PUBLICITY
Neither Party shall use the other Party name in publicity or press releases
without prior consent.
16. GENERAL PROVISIONS
These terms and conditions constitute the entire agreement between the Parties
and supersede any other verbal or written understandings regarding the Service
described in this Agreement. It is expressly understood that commercial
representatives of METROCOM, have no authority to bind METROCOM or to alter the
terms and conditions of this Agreement. Failure of either party to insist on
strict performance of any of these terms and conditions shall not be deemed a
waiver thereof. If any provisions of this Agreement are held to be
unenforceable, the remaining provisions of this Agreement shall remain in
effect. This Agreement shall be governed by the laws of Russian Federation.
17. LEGAL ADDRESSES OF THE PARTIES
CUSTOMER: VI Internet Telecommunications Inc.
Address: 1155 University, Suite 602, Montreal, Quebec, Canada H3B 3A7
Tel. (514) 876-9222 Fax: (514) 876-1001
Banking
Bank of Montreal
Address: 119 St.Jacques Street West, Montreal, Quebec, Canada H2Y 1L6
Account # 4623785 Swift
METROCOM:
Legal Address: 198013, SPb, Moskovsky pr.,28
Address: 191025, Russia, Saint-Petersburg, Nevsky pr., 80
Phone: (812) 118-3131 Fax: (812) 118-3112
Banking
Bank of New York Account #890 -0060-166
SWIFT: ICSPRU2P Industry Construction Bank,
Construction Branch Account # 40702840572005000270
7809001184
- ----------------------------------------------------------
List of Exhibits:
?. List of Customer Assigned Contacts (1 page)
B. Performance Standards (1 page)
C. Approved Contractual Price Protocol ( page)
VI Internet Telecommunications Inc. METROCOM
Name Derek J. Labell Name Ravil Khalikov
Title CEO Title General Director
acting in the strength of the Charter Acting in the strength of Chapter
Signature Signature
Date Date
<PAGE>
Exhibit A
to Agreement
of June 09, 1999
LIST OF CUSTOMER ASSIGNED CONTACTS
FOR IMPLEMENTATION OF AGREEMENT
<TABLE>
<S> <C> <C>
- ------------------------------------------ ---------------------------------- ----------------------------------
Name Position Phone/Fax
- ------------------------------------------ ---------------------------------- ----------------------------------
- ------------------------------------------ ---------------------------------- ----------------------------------
Administrative Representative:
- ------------------------------------------ ---------------------------------- ----------------------------------
- ------------------------------------------ ---------------------------------- ----------------------------------
Derek Labell Chief Executive Officer Office: 514-876-9222
Cell: 514-947-5700
Fax: 514-876-1001
Email: djlabell@supernet .ca
- ------------------------------------------ ---------------------------------- ----------------------------------
- ------------------------------------------ ---------------------------------- ----------------------------------
Technical Representative:
- ------------------------------------------ ---------------------------------- ----------------------------------
- ------------------------------------------ ---------------------------------- ----------------------------------
Gilles Lochet Director of Operations-Montreal Office: 514-878-1555
Pager: 514-997-8978
888-275-0792
514-997-8979
Fax: 514-878-1295
[email protected]
- ------------------------------------------ ---------------------------------- ----------------------------------
- ------------------------------------------ ---------------------------------- ----------------------------------
LIST OF METROCOM ASSIGNED CONTACTS
FOR IMPLEMENTATION OF AGREEMENT
- ------------------------------------------- ------------------------------ -------------------------------------
Name Position Phone/Fax
- ------------------------------------------- ------------------------------ -------------------------------------
- ------------------------------------------- ------------------------------ -------------------------------------
Administrative Representative:
- ------------------------------------------- ------------------------------ -------------------------------------
- ------------------------------------------- ------------------------------ -------------------------------------
Paul Tereshchenko Deputy M&D Director Phone +7 812 118-3140
Fax +7 812 118-3123
e-mail: [email protected]
- ------------------------------------------- ------------------------------ -------------------------------------
- ------------------------------------------- ------------------------------ -------------------------------------
Technical Representative:
- ------------------------------------------- ------------------------------ -------------------------------------
- ------------------------------------------- ------------------------------ -------------------------------------
Tech on Duty (24 hours) Phone +7 812 118-3288
Fax +7 812 118-3222
e-mail: [email protected]
- ------------------------------------------- ------------------------------ -------------------------------------
</TABLE>
VI Internet Telecommunications Inc. METROCOM
Name Derek J. Labell Name Ravil Khalikov
Title CEO Title General Director
Signature Signature
Date Date
<PAGE>
Exhibit B
to Agreement
of June 09, 1999
SERVICE DESCRIPTION AND Performance Standards
1. 256 kbps Service
256 kbps service is a digital line, which may be used for simultaneous two-way
transmission of voice, data, or other digitally encoded information signals. 256
kbps service provided by METROCOM is designed to provide an average performance
of at 99.95% error free seconds of transmission over a continuous twenty-four
(24) period. Error probability of a single symbol in the channel provided by
METROCOM does not exceed 1x10-10
2. E1 Service
E1 Service is a digital line, which may be used for simultaneous two-way
transmission of voice, data, or other digitally encoded information signals. E1
(2,048 Mbps transmission rate) service provided by METROCOM is designed to
provide an average performance of at 99.95% error free seconds of transmission
over a continuous twenty-four (24) period. Error probability of a single symbol
in the channel provided by METROCOM does not exceed 1x10-10
3. Error Free Second
An error free second is defined as any one-second time period in which there are
no bit errors during the transmission of data.
4. Service Availability
Criteria of availability or unavailability of the provided channel comply with
Rec.G.821 ITU
VI Internet Telecommunications Inc. METROCOM
Name. Derek J. Labell______ Name. Ravil U. Khalikov
Title: CEO Title: General Director
Signature:_____________________________________ Signature:__________________
Date:__________________________________________ Date:_______________________
<PAGE>
Exhibit C
to Agreement
of June 09, 1999
CONTRACTUAL PRICE APPROVAL PROTOCOL
All equivalent amounts stipulated in this Protocol are payable in US dollars
I. Charges
Installation Charge:
- --------------------------------------------------------------------------------
Equivalent charge
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$7,500
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total installation charge: $ 7,500 (Seven thousand five hundred US Dollars)
plus VAT (20%)
- --------------------------------------------------------------------------------
Monthly Recurring Charge:
- --------------------------------------------------------------------------------
Equivalent charge for the Service
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$ 35,800
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total monthly charge: $ 35,800 (Thirty five thousand eight hundred US Dollars)
plus VAT (20%)
- --------------------------------------------------------------------------------
II. Payee: Joint Stock Company METROCOM
------
VI Internet Telecommunications Inc. METROCOM
Name_____ Derek J.Labell Name_____ Ravil Khalikov
Title CEO Title____ General Director
Acting in the strength of the Charter acting in the strength of Charter
Signature Signature
Date Date
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001080008
<NAME> Internet VIP, Inc.
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> NOV-13-1998
<PERIOD-END> FEB-28-1999
<CASH> 223,624
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 801
<PP&E> 25,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 249,425
<CURRENT-LIABILITIES> 68,258
<BONDS> 0
0
0
<COMMON> 2,087
<OTHER-SE> 179,080
<TOTAL-LIABILITY-AND-EQUITY> 249,425
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 219,010
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (219,010)
<INCOME-TAX> 0
<INCOME-CONTINUING> (219,010)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (219,010)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
