EXHIBIT 10.2
PROJECT DEVELOPMENT
AND
CONSTRUCTION CONTRACT
BETWEEN AT&T SUBMARINE SYSTEMS, INC.
AND
GLOBAL TELESYSTEMS LTD.
TABLE OF CONTENTS
GENERAL TERMS AND CONDITIONS
Article PAGE
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1 Provision of System................................................... 1
2 Documents Forming the Entire Contract................................. 2
3 Definitions........................................................... 2
4 Contract Price........................................................ 11
5 Terms of Payment by Purchaser......................................... 14
6 Contract Variations................................................... 17
6A. Optional Upgrades..................................................... 18
7 Responsibilities for Permits.......................................... 19
8 Route Survey.......................................................... 20
9 Acceptance............................................................ 21
10 Warranty.............................................................. 25
11 Contractor Support.................................................... 28
12 Purchaser's Obligations............................................... 28
13 Termination for Default............................................... 29
14 Termination for Convenience........................................... 31
15 Suspension............................................................ 34
16 Title and Risk of Loss................................................ 35
17 Force Majeure......................................................... 36
18 Intellectual Property................................................. 38
19 Infringement.......................................................... 43
20 Safeguarding of Information and Technology............................ 44
21 Export Control........................................................ 45
22 Liquidated Damages.................................................... 45
23 Limitation of Liability/Indemnification............................... 46
24 Counterparts.......................................................... 47
25 Design and Performance Responsibility................................. 47
26 Product Changes....................................................... 48
27 Risk and Insurance.................................................... 48
28 Plant and Work Rules.................................................. 51
29 Right of Access....................................................... 51
30 Quality Assurance..................................................... 53
31 Documentation......................................................... 53
32 Training.............................................................. 53
33 Settlement of Disputes/Arbitration.................................... 53
34 Applicable Law........................................................ 54
35 Notices............................................................... 54
36 Publicity and Confidentiality......................................... 55
37 Assignment............................................................ 55
38 Relationship of the Parties........................................... 56
39 Successors Bound...................................................... 56
40 Article Captions...................................................... 57
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Article PAGE
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41 Severability......................................................... 57
42 Survival of Obligations.............................................. 57
43 Non-Waiver........................................................... 57
44 Language............................................................. 57
45 Entire Agreement..................................................... 57
46 Coming into Force.................................................... 58
ii
EXHIBIT 10.2
PROJECT DEVELOPMENT AND
CONSTRUCTION CONTRACT
BETWEEN AT&T SUBMARINE SYSTEMS, INC.
AND GLOBAL TELESYSTEMS LTD.
This Project Development and Construction Contract ("Contracts) is
made this 18th day of March 1997 between AT&T Submarine Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, of
the United States of America, and having an office at 340 Mt. ▇▇▇▇▇▇ Avenue,
Morristown, New Jersey, 07962-1923 of the United States of America (hereinafter
"Contractor") and Global Telesystems Ltd., a corporation organized and existing
under the laws of Bermuda, and having an office at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ (hereinafter "Purchaser").
WHEREAS, Purchaser desires to establish a fiber optic submarine cable
system, to be known as the Atlantic Crossing 1 Submarine Cable System
(hereinafter, and as more fully defined herein, the "System"), which will be
used to provide service between and among the United States mainland, United
Kingdom and Germany; and
WHEREAS, the System will consist of the following Segments:
Segment 1: From United Kingdom to New York, United States;
Segment 2: From New York, United States to Germany; and
Segment 3: From Germany to United Kingdom; and
WHEREAS, Contractor is in the business of designing, constructing,
installing, supplying, delivering, manufacturing, operating, and maintaining
fiber optic submarine cable systems and is familiar with the general business of
the fiber optic submarine cable system industry; and
WHEREAS, Purchaser seeks to purchase and own the System and wishes to
engage Contractor to perform the Work and Upgrade Work; and
WHEREAS, Contractor is willing to perform the Work on a turn-key,
fixed-price basis in accordance with and subject to the terms hereof; and
WHEREAS, Contractor is willing to perform the Upgrade Work on a turn-
key, fixed-price basis in accordance with and subject to the terms hereof.
NOW THEREFORE, IT HAS BEEN AGREED AS FOLLOWS
ARTICLE 1 PROVISION OF SYSTEM
-------------------------------
In consideration of the Contract Price and the Upgrade Prices, the
Contractor agrees to undertake the Work and the Upgrade Work and to provide the
Purchaser with the
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System meeting the System Performance Requirements on or before the Scheduled
RFS Date and the System Upgrades meeting the requirements of Article 6A, all in
accordance with the terms hereof.
ARTICLE 2 DOCUMENTS FORMING THE ENTIRE CONTRACT
-------------------------------------------------
This Contract consists of these commercial Terms and Conditions and
the following documents (in the form of attachments, including appendices,
attached hereto), which shall be read and construed as part of the Contract:
. Technical Volume (includes Route Information), Appendix 5
. Plan of Work, Appendix 3, Upgrade Plan of Work, Appendix 3A
. Provisioning Schedule, Appendix 1, Upgrade Provisioning Schedule,
Appendix 1A
. Billing Schedule, Appendix 2, Upgrade Billing Schedule, Appendix 2A
. Invoice Format, Appendix 4
In the event of any inconsistency between the Terms and Conditions and
the above listed documents, the Terms and Conditions shall prevail. The
Appendices listed above have no order of precedence.
ARTICLE 3 DEFINITIONS
-----------------------
Definitions are as described in the specific Articles. Except as
otherwise defined the following definitions shall apply throughout the Contract:
AAA has the meaning set forth in Sub-Article 33(B).
ACCEPTANCE TESTING means (i) with respect to a Segment or the System,
the tests described in the System Commissioning and Acceptance section of
the Technical Volume or developed pursuant to such section by mutual
agreement of the Parties (with 15 days prior notice to the Independent
Engineer) and reasonably designed to verify that such Segment or the System
meets the applicable Performance Requirements and (ii) with respect to any
System Upgrade, the tests described in the System Commissioning and
Acceptance section of the Technical Volume or developed pursuant to such
section by mutual agreement (with 15 days prior notice to the Independent
Engineer) of the Parties and reasonably designed to verify that the System
Upgrade meets the applicable Performance Requirements.
ACCESS RIGHTS means all ownership, easement and/or other property
rights necessary to access and occupy the sites for cable stations in order
to own, operate and maintain the System.
ACTUAL KNOWLEDGE means the actual knowledge of any executives with
management responsibility for the Contract.
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ASSIGNMENT has the meaning set forth in Sub-Article 37(A).
BANKRUPTCY EVENT means an event specified in Sub-Article 13(A)(3) or
13(A)(4) with Contractor as the "other Party".
BILLING SCHEDULE means a billing schedule attached hereto as Appendix
2.
CAPACITY PURCHASE AGREEMENT means the Capacity Purchase Agreement
substantially in the form agreed by the Parties on the date this Contract
comes into force in accordance with Article 46.
CERTIFICATE OF COMMERCIAL SERVICE means a certificate issued by
Purchaser to Contractor certifying that a Segment, the System or a System
Upgrade is Ready for Commercial Service.
CERTIFICATE OF FINAL ACCEPTANCE means a certificate issued by
Purchaser to Contractor certifying that the System or a System Upgrade is
Ready for Final Acceptance.
CERTIFICATE OF PROVISIONAL ACCEPTANCE means a certificate issued by
Purchaser to Contractor certifying that a Segment, the System or a System
Upgrade is Ready for Provisional Acceptance.
CIBC COMMITMENT LETTER means the Atlantic Crossing 1 Commitment Letter
to be entered into among the Purchaser, CIBC Wood Gundy Securities Corp.
and CIBC Inc. providing for loans to Purchaser in an aggregate amount of
$410,000,000.
COMMISSIONING REPORT has the meaning set forth in the System
Commissioning and Acceptance section of the Technical Volume.
CONFIDENTIAL INFORMATION has the meaning set forth in Sub-Article
36(B).
CONSENT means a Consent and Agreement to be entered into among
Contractor, Purchaser and the financing parties described in Sub-Article
37(C) and substantially in the form agreed by the Parties on the date this
Contract comes into force in accordance with Article 46.
CONTINGENCY ACCOUNT means the Contingency Account to be created under
the Escrow and Security Agreement.
CONTRACT means this agreement, specifically consisting of the
documents described in Article 2, and shall be deemed to include any
amendments thereto or Contract Variations pursuant to Article 6 (Contract
Variations).
CONTRACTOR means the entity that has executed this Contract as the
Contractor (AT&T Submarine Systems, Inc.) and that will be responsible for
the performance of
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the Work (and if applicable, Upgrade Work) under this
Contract and shall include its permitted successors and/or assigns.
CONTRACT PRICE means the Initial Contract Price, plus any variations
pursuant to Article 6 (Contract Variations), Taxes as set forth in Sub-
Article 4(B) and other adjustments to the Contract Price provided for in
this Contract.
CONTRACT TAXES has the meaning set forth in Sub-Article 4(B)(1).
CONTRACT VARIATION has the meaning set forth in Sub-Article 6(A).
DATE OF COMMERCIAL SERVICE, PROVISIONAL ACCEPTANCE OR FINAL ACCEPTANCE
means the date that Purchaser receives a Commissioning Report or an Upgrade
Commissioning Report, as the case may be, demonstrating that a Segment or
the System or a System Upgrade, as the case may be, is Ready for Commercial
Service, Ready for Provisional Acceptance or Ready for Final Acceptance.
DEFAULT means an Event of Default or any event, condition or
occurrence which with the giving of notice or passage of time or both would
be an Event of Default.
DELIVERABLE SOFTWARE has the meaning set forth in Sub-Article 18(C).
DELIVERABLE TECHNICAL MATERIAL has the meaning set forth in Sub-
Article 18(B).
DISPUTE ACCOUNT means the Dispute Account to be created under the
Escrow and Security Agreement.
ESCROW AGENT means The Chase Manhattan Bank, in its capacity as escrow
agent and security agent under the Escrow and Security Agreement, and its
successors in such capacity.
ESCROW AND SECURITY AGREEMENT means that Escrow and Security Agreement
to be entered into by and among AT&T Submarine Systems, Inc., Global
Telesystems Ltd. and The Chase Manhattan Bank, as amended from time to
time.
EVENT OF DEFAULT has the meaning set forth in Sub-Article 13(A).
EXCLUDED TAX means (i) any franchise, excess profits, net worth,
capital or capital gains Tax, as well as any Tax on doing business or
imposed on net or gross income or receipts (including minimum and
alternative minimum Taxes measured by any items of Tax preference), but in
each case excluding Taxes that are or are in the nature of sales, use,
excise, license, stamp, rental, ad valorem, value added or property Taxes;
(ii) any Taxes imposed by a jurisdiction other than one in which (a) the
Contractor is or is treated as engaged in activities contemplated by or in
fulfillment of
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the Contract or (b) the Purchaser or its affiliates has a nexus to such
jurisdiction and the Tax imposed is attributable to that nexus, (iii) Taxes
imposed on the Contractor as a result of Contractor's gross negligence or
willful misconduct and (iv) any import duty, other import related charges,
sales or use tax, VAT or property tax imposed by the United States or any
political subdivision thereof or Taxing authority therein in respect of
Supplies brought into the United States for testing, modification or other
similar purposes prior to being installed or used outside the United
States.
FINAL COMMISSIONING REPORT has the meaning set forth in the System
Commissioning and Acceptance section of the Technical Volume.
FINAL SURVEY REPORT means the final survey report described in Section
1.1.4.2 of the Route Survey, Cable Loading and Marine Operations section of
the Technical Volume.
FINANCING DOCUMENTS means the agreements relating to the financing
referred to in Sub-Article 37(C), including without limitation the
financing, security and related documentation referred to in the CIBC
Commitment Letter and the Holding Company Note Purchase Agreement and
related documents.
FINANCING EVENT OF DEFAULT means any event, condition or occurrence
which would permit any party or parties to a Financing Document to
terminate its commitments thereunder or accelerate Purchaser's obligations
thereunder.
FORCE MAJEURE has the meaning set forth in Sub-Article 17(A).
*
HOLDING COMPANY means Global Telesystems Holdings Ltd., a corporation
organized and existing under the laws of Bermuda.
HOLDING COMPANY NOTE PURCHASE AGREEMENT means a Note Purchase
Agreement to be entered into between the Holding Company and the purchasers
named therein providing for $150,000,000 in loans to Holding Company, as
amended from time to time.
INDEPENDENT ENGINEER means Conexart Technologies, Inc. or a similarly
qualified successor in the capacity as the engineer to the financing
sources specified in Sub-Article 37(C) who has agreed to be bound by the
confidentiality provisions of this Contract and who is not affiliated with
a competitor of Contractor.
INFORMATION has the meaning set forth in Sub-Article 20(A).
INITIAL CONTRACT PRICE has the meaning set forth in Sub-Article
4(A)(1).
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
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INITIAL UPGRADE PRICE has the meaning set forth in Sub-Article
4(A)(2).
INTELLECTUAL PROPERTY has the meaning set forth in Sub-Article 18(A).
LAWS means any laws, ordinances, regulations, rules, orders,
proclamations, requirements of governmental authorities or treaties.
MANUFACTURING MATERIALS has the meaning set forth in Sub-Article
13(B).
NEXUS TAX means any Tax imposed by way of withholding in respect of or
in lieu of an Excluded Tax, but only to the extent such Tax would not have
been imposed but for the nexus (other than as a consequence of the
activities of the Contractor) of the Purchaser or its affiliate to the
jurisdiction imposing the Tax.
NON-SHIP COSTS has the meaning set forth in Sub-Article 10(A)(2).
NOTICE OF TERMINATION has the meaning set forth in Sub-Article 14(A).
OPERATIONS, ADMINISTRATION AND MAINTENANCE AGREEMENT means the
Operations, Administration and Maintenance Agreement to be entered into
between AT&T Submarine Systems, Inc. and Global Telesystems Ltd., as
amended from time to time.
OPTION PERIOD has the meaning set forth in Sub-Article 6A(B).
PARTY(IES) means either of the Purchaser and/or the Contractor, as
appropriate.
PAYMENT ACCOUNT means the Payment Account to be created under the
Escrow and Security Agreement.
PAYMENT ESCROW DATE means the first date after the date hereof on
which no funds remain in the Payment Account (or on which Contractor has
invoiced an aggregate amount equal to the lesser of $275,000,000 and the
aggregate amount deposited into the Payment Account and such amount has
been paid (or deposited into the Dispute Account) or is due (or required to
be deposited into the Dispute Account)).
PERFORMANCE REQUIREMENTS means (i) with respect to a Segment or the
System, the applicable System Performance Requirements set forth or to be
developed by mutual agreement pursuant to the Transmission Performance
section of the System Description section of the Technical Volume, (ii)
with respect to any System Upgrade, the System Performance Requirements set
forth in or to be developed by mutual agreement pursuant to the Technical
Volume or (iii) in each case, such other Segment, System or System Upgrade
performance levels as mutually agreed by the Parties, including impairment
budgets.
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PERMITS means all Access Rights, permits, pipeline and cable crossing
agreements, approvals, "no objections", permissions-in-principle,
authorizations, consents, customs clearances, registrations, certificates,
rights-of-way, certificates of occupancy, licenses, including without
limitation, landing licenses, orders, vessel and crew authorizations/visas,
permission for the operation of navigational aids and radio systems and
similar authorizations necessary to complete the Work and operate and
maintain the System (other than any of the foregoing (i) relating to the
ownership, operation and maintenance of the System and not necessary until
after the System is Ready for Final Acceptance, (ii) which is or would be
needed by Purchaser to engage in any business outside the business of
developing, owning and operating a submarine cable system or (iii) which is
or would be needed at any time by any purchaser or lessee of capacity on
the System).
PHASE 2 SEGMENT means Segment 2 or Segment 3.
PROVISIONING SCHEDULE means the price schedule attached hereto in
Appendix 1.
PURCHASER means Global Telesystems Ltd. and shall include its
permitted successors and assigns.
READY FOR COMMERCIAL SERVICE means (i) for any Segment, that (a) such
Segment has the ability to carry commercial traffic between the two landing
points of such Segment (at 5 Gb/s per fiber pair in the case of Segment 1
and at 10 Gb/s per fiber pair in the case of a Phase 2 Segment) meeting
performance criteria of ITU-T G.826 as defined in the System Performance
section of the Technical Volume and has line monitoring and protection
switching capability, (b) Contractor has tested and provided for STM-1
interconnectivity capability to the Segment terminal equipment according to
ITU-T G.826, (c) Contractor has substantially performed its obligations
under Article 18 (Intellectual Property) then required to be performed by
it, (d) all Permits are obtained for such Segment, and (e) unless both
Parties agree otherwise, with respect to a Phase 2 Segment, the other Phase
2 Segment shall have satisfied the conditions set forth above, (ii) for the
System, that the System has the ability to carry commercial traffic
throughout the System (at 10 Gb/s per fiber pair) meeting performance
criteria of ITU-T G.826 as defined in the System Performance section of the
Technical Volume with self healing ring protection capability and per
Segment protection capability, has line monitoring and per Segment
protection switching capability and has network management capability, (b)
Contractor has tested and provided for STM-1 interconnectivity capability
to the System terminal equipment according to ITU-T G.826, (c) Contractor
has substantially performed its obligations under Article 18 (Intellectual
Property) then required to be performed by it, (d) an interconnect
agreement is in place with a bona fide carrier at each landing point, and
(e) all Permits are obtained for the System and (iii) for any System
Upgrade, the System is Ready for Commercial Service at the capacity
specified for such System Upgrade.
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READY FOR FINAL ACCEPTANCE means (i) for the System, that (a)(l) the
System has successfully and continuously (other than by reason of Force
Majeure in which case the test period shall be extended for a time period
equal to the time period of such Force Majeure) functioned in compliance
with the System Performance Requirements during the period of ninety (90)
consecutive days after the Date of Provisional Acceptance or (II) if the
System shall have failed to meet the System Performance Requirements at any
time during such period (other than by reason of Force Majeure), the
Contractor has corrected such failure and the System has successfully and
continuously (other than by reason of Force Majeure in which case the test
period shall be extended for a time period equal to the time period of such
Force Majeure) functioned in compliance with the System Performance
Requirements for such additional period of time not to exceed ninety (90)
days (and not to end prior to the date 90 days after the Date of
Provisional Acceptance) as reasonably determined by the Independent
Engineer as being sufficient to confirm that such failure has been
corrected and that no other failures are likely to appear and (b) all
deficiencies noted in the Certificate of Provisional Acceptance have been
corrected (other than minor deficiencies which will not affect the
operation of the System, in respect of which an equitable adjustment to the
Contract Price will be made) and (c) Contractor has complied in all
material respects with Article 18 (Intellectual Property) and (ii) for any
System Upgrade, that (a)(l) the System Upgrade has successfully functioned
in compliance with the System Performance Requirements during the period of
ninety (90) days after the Date of Provisional Acceptance of the System
Upgrade or (II) if the System Upgrade shall have failed to meet the System
Performance Requirements during such period, the Contractor has corrected
such failure and the System Upgrade has successfully functioned in
compliance with the System Performance Requirements for such additional
period of time not to exceed ninety (90) days as reasonably determined by
the Independent Engineer as sufficient to confirm that such failure has
been corrected and (b) all deficiencies noted in the Certificate of
Provisional Acceptance have been corrected (other than minor deficiencies
which will not affect the operation of the System, in respect of which an
equitable adjustment of the Contract Price will be made) and (c) Contractor
has complied in all material respects with Article 18 (Intellectual
Property).
READY FOR PROVISIONAL ACCEPTANCE means (i) with respect to any
Segment, (a) such Segment is complete in all material respects (and in any
event is Ready for Commercial Service), (b) the results of Acceptance
Testing of such Segment demonstrate that such Segment has satisfied the
System Performance Requirements, (c) Contractor has substantially performed
its obligations under Article 18 (Intellectual Property) then required to
be performed by it, (d) all Permits are obtained for such Segment, and (e)
unless both Parties agree otherwise, with respect to a Phase 2 Segment, the
other Phase 2 Segment shall have satisfied the conditions set forth above,
(ii) with respect to the System, the System is complete in all material
respects (and in any event is Ready for Commercial Service), all three
Segments are Ready for Provisional Acceptance with self-healing ring
protection capability and per Segment protection capability and line
monitoring and network management capability and (iii) with respect to any
System Upgrade, the results of Acceptance Testing of such System
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Upgrade demonstrate that such System Upgrade is complete in all material
respects and is sufficient to realize the Performance Requirements.
REPRESENTATIVES has the meaning set forth in Article 36(B).
REQUIRED AMOUNT means initially *.
RETAINAGE means an amount equal to * of the Initial Contract Price.
RETAINAGE LETTER OF CREDIT means a letter of credit issued by a bank
reasonably satisfactory to Contractor with a face amount equal to the
amount of the Retainage and substantially in the form agreed by the Parties
on the date this Contract comes into force in accordance with Article 46.
RETESTING has the meaning set forth in Sub-Article 9(B)(3).
ROUTE SURVEY means the route survey described in the Route Survey,
Cable Loading and Marine Operations section of the Technical Volume.
SALES AGENCY AGREEMENT means the Sales Agency Agreement to be entered
into between AT&T Submarine Systems, Inc. and Global Telesystems Ltd., as
amended from time to time.
SCHEDULED RFS DATE has the meaning set forth in Sub-Article 9(A).
SCHEDULED UPGRADE DATE means for any System Upgrade, the date by which
the Contractor agrees such System Upgrade will be Ready for Provisional
Acceptance or Commercial Service.
SEGMENT means Segment 1, Segment 2 or Segment 3, as the case may be.
SEGMENT 1 means Segment C as defined in the Technical Volume from
United Kingdom to New York, United States and landing in locations capable
of interconnecting with major telecommunications carriers.
SEGMENT 2 means Segment A as defined in the Technical Volume from New
York, United States to Germany and landing in locations capable of
interconnecting with major telecommunications carriers.
SEGMENT 3 means Segment B as defined in the Technical Volume from
Germany to United Kingdom and landing in locations capable of
interconnecting with major telecommunications carriers.
SHIP COSTS has the meaning set forth in Sub-Article 10(A)(2).
SHIP PERIOD has the meaning set forth in Sub-Article 10(A).
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
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SUPPLIES means any and all materials, plant, machinery, equipment,
hardware and items supplied by the Contractor under this Contract.
SUSPENSION means a suspension in pursuant to Sub-Article 15(A) or
15(B).
SYSTEM means the four fiber pair submarine cable system consisting of
Segments 1, 2 and 3 (at a per fiber pair capacity of * Gb/s at the Date of
Commercial Service or the Date of Provisional Acceptance, as the case may
be, of the System, with each Segment upgradeable to * Gb/s per fiber pair
at the Date of Provisional Acceptance) as more fully described in the
System Description section of the Technical Volume.
SYSTEM PERFORMANCE REQUIREMENTS has the meaning set forth in the
System Description section of the Technical Volume.
SYSTEM UPGRADE has the meaning set forth in Sub-Article 6A(A).
TAX means any tax, duty, levy, charge or custom (including, without
limitation, any sales or use tax, VAT or octroi duty relating to the
Contract items and fiscal stamps connected with Contract legalization)
imposed or collected by any taxing authority or agency (domestic or
foreign).
TECHNICAL VOLUME means the Technical Volume attached hereto as
Appendix 5.
UPGRADE BILLING SCHEDULE means the billing schedule attached hereto as
Appendix 2A.
UPGRADE COMMISSIONING REPORT has the meaning set forth in the System
Commissioning and Acceptance section of the Technical Volume.
UPGRADE PERIOD has the meaning set forth in Sub-Article 6A(E).
UPGRADE PLAN OF WORK means the plan of work attached hereto as
Appendix 3A.
UPGRADE PRICE means, for any System Upgrade, the Initial Upgrade Price
for such System Upgrade, plus any variations pursuant to Article 6
(Contract Variations), Taxes as set forth in Sub-Article 4(B) and other
adjustments to such Upgrade Price provided for in this Contract.
UPGRADE PROVISIONING SCHEDULE means the provisioning schedule attached
hereto as Appendix 1A.
UPGRADE WARRANTY PERIOD has the meaning set forth in Sub-Article
10(A).
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
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UPGRADE WORK means the activities and services to be performed or
provided by Contractor under Article 6A.
UPGRADEABILITY LIABILITY LIMIT means at any time, the (i) the sum of
the Initial Contract Price plus all of the Initial Upgrade Prices less, if
----
the System shall have been upgraded to a capacity of * Gb/s or more per
fiber pair, (ii) the product of (A) the sum of the Initial Contract Price
plus all of the Initial Upgrade Prices and (B) the ratio of (I) the
aggregate capacity (for all four fiber pairs) to which the System has been
upgraded by System Upgrades to (II) * Gb/s.
WARRANTY PERIOD has the meaning set forth in Sub-Article 10(A).
WORK means all activities and services (other than the activities and
services specified in this Contract to be provided by Purchaser) necessary
to be performed or provided in developing, planning, designing,
manufacturing, constructing, delivering, installing and testing the System,
until the System is Ready for Final Acceptance, including without
limitation, designating, coordinating and obtaining on behalf of Purchaser
the Access Rights and obtaining all Permits. Whether or not used in
conjunction with the term "Supplies", the term "Work" shall always be
deemed to include the provision of the relevant Supplies, unless the
context requires otherwise.
ARTICLE 4 CONTRACT PRICE
--------------------------
A. Contract Price
1. The initial Contract Price for the Work, in United States
Dollars (US$) is a fixed fee of 625,909,438 dollars (the "Initial
Contract Price"). The Initial Contract Price does not include the
cost of optional upgrades which are described in Article 6A
(Optional Upgrades), any contract variations as provided for in
Article 6 (Contract Variations), any Taxes, services performed
pursuant to the Operations, Administration and Maintenance
Agreement, or services performed pursuant to the Sales Agency
Agreement.
2. The initial Upgrade Price for any Upgrade Work, in United States
Dollars (US$) is the fixed fee set forth in Appendix 2A (the
"Initial Upgrade Price"). No Initial Upgrade Price includes the
cost any contract variations as provided for in Article 6
(Contract Variations), any Taxes, services performed pursuant to
the Operations, Administration and Maintenance Agreement, or
services performed pursuant to the Sales Agency Agreement.
B. Taxes, Levies and Duties
1. The Initial Contract Price and each Initial Upgrade Price, as
stated in Sub-Article 4(A) above, excludes any Tax. The Contract
Price and each
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
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Upgrade Price shall without duplication be adjusted for any Tax
imposed on or in connection with this Contract (including,
without limitation, the execution and delivery of this Contract,
the Work, the Upgrade Work and the Supplies, but excluding any
Excluded Taxes) (any such Taxes, other than Excluded Taxes, are
hereinafter referred to as "Contract Taxes"). Contractor has
provided a good faith estimate of the Contract Taxes payable by
the Purchaser; it being understood that the Contractor shall have
no liability under this Contract or otherwise to the Purchaser
for any errors or omissions in such estimate or any losses
arising therefrom. The Contractor shall be responsible for any
Excluded Tax that might be incurred by the Contractor as well as
any Tax described in clause (iv) of the definition of Excluded
Tax.
2. The Purchaser will be ultimately responsible for the payment of
all Contract Taxes (including, without limitation, Contract Taxes
that are VAT, octroi duties relating to Contract items and fiscal
stamps, etc. connected with Contract legalizations to the
authorities in their countries). In the case of any Contract
Taxes paid by the Contractor, the Contractor shall submit payment
on the Purchaser's behalf and Contractor will be reimbursed by
the Purchaser in accordance with Article 5 (Terms of Payment by
Purchaser).
3. The Contractor agrees to use reasonable efforts including,
without limitation, by registering for VAT and any applicable
sales Taxes in any country, state or other jurisdiction where
legally required, to cooperate with and assist Purchaser in its
efforts (i) to have Supplies which are the subject of this
Contract made exempt from Contract Taxes, whether in the
manufacture of the Supplies or related to the importation or
location or installation of the Supplies, (ii) to request
revisions, drawbacks, remissions, reclassifications or the like
to the jurisdictions identified by the Purchaser; or (iii) to
reduce or eliminate Contract Taxes (including the provision of
applicable certifications and forms) and to obtain any available
refunds of Contract Taxes, provided that the Contractor shall not
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be required to act other than in accordance with the relevant
Laws then in force. The Purchaser shall reimburse the Contractor,
in accordance with Article 5, for any costs (including the
reasonable fees and expenses of legal counsel, accountants and
other advisors) incurred by the Contractor under this Sub-Article
4(B)(3) provided that Purchaser was notified and has consented to
--------
the incurrence of such costs, fees and expenses. Contractor shall
not be required to cooperate with and assist Purchaser in its
efforts under this Sub-Article 4(B)(3) or to take any action
hereunder which in the Contractor's good faith judgment would
incur any costs or if in Contractor's good faith judgment it
would be advisable to obtain the advice of counsel, accountants
or other advisors prior to cooperating with or assisting
purchaser or taking any action, unless in each case,
13
Purchaser has agreed to reimburse Contractor under the foregoing
proviso.
4. Prior to the Date of Provisional Acceptance with respect to the
System or any System Upgrade, the Contractor shall provide
evidence of having made all payments for Taxes included in the
Contract Price or Upgrade Price or described in clause (iv) of
the definition of Excluded Taxes, other than VAT due on payments
of the Contract Price or Upgrade Price made on or after the Date
of Provisional Acceptance of the System or System Upgrade, which
evidence shall be provided within sixty (60) days of the date of
each such payment.
5. As part of Work or any Upgrade Work, the Contractor shall
obtain, on Purchaser's behalf, any import license or other
official authorization and carry out all customs formalities
necessary for the importation or exportation of goods in
connection with such Work or Upgrade Work. The Purchaser agrees
to be the Importer or Exporter of Record or designate an Importer
or Exporter of Record/Consignee on its behalf. Purchaser must
provide a Letter of Authorization from any third party designate
stating it agrees to be the Importer or Exporter of Record on
Purchaser's behalf and identify the name and address of the
designated Importer or Exporter of Record.
6. The Supplies to be installed or held on land shall be delivered
to the agreed point at the named place of destination and shall
be consigned to the Purchaser.
C. Withholding Tax
1. If withholding for any Tax is required in respect of any payment
to the Contractor, the Purchaser shall (i) withhold the
appropriate amount from such payment, (ii) pay such amount to the
relevant authorities in accordance with the applicable Laws and
(iii) in the case of any such withholding in respect of a
Contract Tax or a Nexus Tax and subject to the Contractor's
satisfying the obligations set forth in the last sentence of this
Sub-Article 4(C)(1), pay the Contractor an additional amount such
that the net amount received by the Contractor is the amount the
Contractor would have received in the absence of such
withholding. In such a case, the Purchaser shall provide to the
Contractor, as soon as reasonably practicable, a certified copy
of an official tax receipt for any Tax which is retained from any
payment due to the Contractor or for any Tax which is paid on
behalf of the Contractor. All such receipts shall be in the name
of the Contractor. The Contractor agrees to complete accurately
and timely provide to the Purchaser or, if required, to the
applicable Taxing authority, such forms, certifications or other
documents as may be requested in timely manner by Purchaser, in
order
14
to allow it to make payments to the Contractor without any
deduction or withholding on account of withholding Taxes (or at a
reduced rate thereof) or to receive a refund of any amounts
deducted or withheld on account of withholding Taxes.
2. If the Contractor shall become aware that it is entitled to
receive a refund or credit from a relevant taxing or governmental
authority in respect of a Contract Tax or Nexus Tax as to which
the Purchaser has paid an additional amount pursuant to Sub-
Article 4(C)(1) above, the Contractor shall promptly notify the
Purchaser of the availability of such refund or credit and shall,
within 30 days after receipt of a request by the Purchaser
(whether as a result of notification that it has made to the
Purchaser or otherwise), make a claim to such taxing or
governmental authority for such refund or credit at the
Purchaser's expense. If the Contractor receives a refund or
credit in respect of a Contract or Nexus Tax as to which the
Purchaser has paid an additional amount pursuant to Sub-Article
4(C)(1 ) above, or if, as a result of the Purchaser's payment of
such additional amounts, the Contractor or any other member of an
affiliated group, as defined in section 1504(a) of the Code, of
which the Contractor is a member, receives a credit against Taxes
imposed on its income or franchise taxes imposed on it by the
country under the laws of which it is organized or any political
subdivision thereof, the Contractor shall promptly notify the
Purchaser of such refund or credit and shall within 30 days from
the date of receipt of such refund or benefit of such credit pay
over the amount of such refund or benefit of such credit
(including any interest paid or credited by the relevant taxing
or governmental authority with respect to such refund or credit)
to the Purchaser (but only to the extent of the additional
payments made by the Purchaser under Sub-Article 4(C)(1 ) above
with respect to the Contract or Nexus Tax giving rise to such
refund or credit), net of all out-of-pocket expenses of the
Contractor; provided, however, that the Purchaser, upon the
-------- -------
request of the Contractor agrees to repay the amount paid over to
the Purchaser (plus penalties, interest or other charges due to
the appropriate authorities in connection therewith) to the
Contractor in the event the Contractor is required to repay such
refund or credit to such relevant authority.
ARTICLE 5 TERMS OF PAYMENT BY PURCHASER
---------------------------------------
A. General Conditions of Payment
1. All payments shall be made and all invoices shall be rendered in
US Dollars (US$). The Purchaser shall be responsible for and
shall pay all costs and fees for payment, as well as the banking
and cabling costs. All banking documents and correspondence must
be in English.
15
B. Invoice Procedures
1. All invoices for Work shall be submitted according to the
Billing Schedule. All invoices for Work shall have a certificate
in the form of Appendix 4-1 attached.
2. Any Contract Variations shall be invoiced and paid in accordance
with the terms of the Contract Variation as specified in Article
6 (Contract Variations).
3. Invoices for Upgrade Work shall be submitted according to the
Upgrade Billing Schedule and shall be paid in accordance with
this Article 5.
4. Invoices for amounts not described in Sub-Sections 1-3 above,
which may become payable hereunder shall be submitted after
applicable costs have been incurred or such other time as may be
specified in this Contract. Such invoices shall be accompanied by
a certificate of the Contractor explaining such amount and
certifying that it is payable.
5. The Contractor shall render all invoices to the following address
or facsimile number:
Global Telesystems Ltd.
▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇
with a copy to
Conexart Technologies, Inc.
▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ J451 K3
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
C. Payment Procedures
1. The Purchaser shall pay the Contractor, and the Contractor shall
accept payment, in accordance with this Article 5 (Terms of
Payment by Purchaser).
16
2. At the time this Contract comes into force pursuant to Article
46 hereof, the initial payment of * shall be paid by Purchaser to
Contractor, and Purchaser shall deposit with the Escrow Agent the
amount to be deposited pursuant to the Escrow Agreement to be
applied in accordance with the terms of the Escrow and Security
Agreement.
3. Invoices given to the Purchaser (and the Independent Engineer
and, until no funds remain in the Payment Account, the Escrow
Agent) on or before the last day of any month shall, subject to
Sub-Article 5(C)(5) below, be due and payable on the last day of
the next month or such other time as may be specified in this
Contract.
4. Invoices not paid when due shall accrue late payment charges
from the day, following the day, on which payment was due until
the day on which it is paid. Invoices for extended payment
charges shall not be issued for an amount less than U.S. $1,000.
Extended payment charges shall be computed at the rate of one
percent (1%) per month.
5. In the event that the Purchaser has an objection to any invoice
or other payment obligation or any amount owing by Contractor to
Purchaser shall not have been paid when due, the Purchaser shall
promptly notify the Contractor (and, until no funds remain in the
Payment Account, the Escrow Agent) of such objection and such
amount, and the Purchaser and Contractor shall make every
reasonable effort to settle promptly the dispute concerning the
payment(s) in question. In the event such dispute cannot be
settled, the Purchaser will have the right to withhold payment of
the disputed amount(s) (or withhold from the invoice amount a sum
equal to the amount purportedly owing by Contractor) so long as
(i) it provides a statement from the Independent Engineer (or,
prior to the date of the first draw under the Financing
Documents, the Purchaser) disputing the invoice or specifying
such amount owing by Contractor and (ii) it deposits, in full,
such disputed amount(s) into (or such amount is deposited,
pursuant to the Escrow and Security Agreement, into) the Dispute
Account.
(a) Provided such disputed amount is placed into the Dispute
Account in a timely manner, the Purchaser shall not be
deemed to be in breach of or in default for failing to pay
Contractor.
(b) The Escrow Agent will distribute the disputed amount in
accordance with the terms of the Escrow and Security
Agreement.
(c) In addition, the prevailing Party shall be entitled to
receive from the other Party an amount equal to (i) interest
on the distributed,
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
17
disputed amount at a rate of one percent (1%) per month less
(ii) interest distributed by the Escrow Agent under clause
(b) above.
Purchaser shall not set off against Contractor's obligations
except in accordance with this Sub-Article 5(C)(5).
6. The Purchaser shall make timely payments for that portion of the
invoice not in dispute in accordance with Sub-Article 5(C) or
such payments will be assessed extended payment charges as set
forth in Sub-Article 5(C)(4). Pending resolution of the dispute,
the Purchaser may not withhold payment (unless also subject to
dispute) on any other invoice concerning different goods and/or
services submitted by Contractor.
7. The Contractor will accept a letter of credit, to be issued in
form and substance satisfactory to it and issued by an
institution satisfactory to it, in lieu of the amount required to
be deposited in the Contingency Account.
ARTICLE 6 CONTRACT VARIATIONS
-----------------------------
A. Either Party may request, during construction of the System or any
System Upgrade, by written order (with a copy to the Independent Engineer), a
contract variation requiring additions or alterations to, deviations or
deductions from the System or System Upgrade ("Contract Variation"). If the
other Party consents, in its sole discretion, this change will be formalized as
an amendment to this Contract by a Contract Variation.
B. A Contract Variation shall not become effective unless and until the
price adjustment, the terms and schedule of payment and the extension of time
and all other terms have been mutually agreed upon by the Parties and such
Contract Variation is signed by an authorized representative of each Party. Each
Contract Variation shall be incorporated as an amendment to the Contract.
C. Contractor may seek a Contract Variation for any change, after the
date hereof, of any Law (except those affecting only Taxes or wages) which
requires a change in the Work or the Upgrade Work or affects the costs (other
than wages) incurred or to be incurred by the Contractor or any combination of
the foregoing and Purchaser shall agree to any such change in Work or Upgrade
Work as may be required and to an equitable adjustment to the Contract Price or
the applicable Upgrade Price. As of the date hereof, neither Party has Actual
Knowledge of any proposed change in any Law that would require a change in the
Work or the Upgrade Work.
D. The Initial Contract Price is based on the assumption that Contractor
will acquire or build two cable stations and lease space in one cable station.
If fewer or more cable stations need to be built or acquired, both Parties will
agree to an equitable adjustment
18
to the Contract Price and the terms and schedule of payments. No extension of
time will be granted solely because three cable stations will be built, unless
the Purchaser consents thereto.
E. Contractor may seek a Contract Variation to replace Germany as a
landing site with a landing site in the Netherlands and, so long as (i) the
Scheduled RFS Date is not delayed as a result thereof, (ii) the Contract Price
is equitably increased, if necessary, by no more than $3,000,000 and (iii) it is
reasonable to assume that the Netherlands landing license will be obtained by
the time required by the Financing Documents, the Purchaser shall agree to such
Contract Variation.
ARTICLE 6A. OPTIONAL UPGRADES
--------------------------------
A. This Article includes the terms and conditions governing an option for
future upgrades to the System (each a "System Upgrade") that may be exercised by
Purchaser during the Option Period.
B. *
C. *
D. *
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
19
E. *
F. *
G. *
H. *
I. *
J. *
K. *
ARTICLE 7 RESPONSIBILITIES FOR PERMITS
--------------------------------------
A. The Purchaser shall reasonably cooperate with and assist the
Contractor to obtain all Permits, to the extent that Purchaser's cooperation and
assistance are necessary for Contractor to expeditiously and cost-efficiently
obtain such Permits. The Purchaser agrees to respond promptly to any such
request from Contractor. Further, the Purchaser agrees that it will not impede
or interfere with Contractor's activities or Contractor's abilities to perform
its
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
20
obligations. Upon notice from Contractor with respect to a Permit or receipt by
Purchaser of a copy of a Permit, Purchaser shall fulfill all conditions of such
Permit and perform all responsibilities thereunder, except to the extent that
such conditions or responsibilities are those of the Contractor under Work.
B. Subject to paragraph C below, the Contractor shall have the
responsibility for obtaining all Permits on Purchaser's behalf.
C. Any delay in obtaining or failure to obtain any Permit shall
constitute a Force Majeure and be treated as described in Article 17 (Force
Majeure), except to the extent such delay is a result of Contractor's gross
negligence or willful misconduct.
D. The Contractor shall, before making any variations from the designs,
drawings, plans or procedures that may be necessitated by so complying with any
Laws and that would represent a material change to the overall design of the
System, give to the Purchaser written notice, specifying the variations proposed
to be made, and the reasons for making them. Except with respect to variations
necessitated by complying with any changes, after the date hereof, in any Laws
(the costs with respect to which shall be borne by the Purchaser), the
Contractor shall be responsible for the payment of any and all costs incurred as
a result of the need to vary design, drawings, plans or procedures to comply
with any of the circumstances set forth in this Article.
E. As of the date hereof, neither Party has Actual Knowledge of any
proposed changes in the foregoing which would necessitate any such variation.
F. The Contractor shall (i) give all notices required by any Laws to be
given to any authority and (ii) perform or permit the performance by authorized
persons of any inspection required by the said Laws, in each case as in effect
on the date hereof.
G. Within 30 days after the date of execution of this Contract, the
Contractor will prepare and deliver to the Purchaser a detailed list of Permits
that to its knowledge are required to be obtained under current law in order to
complete the Work and shall update such list from time to time if it becomes
aware of changes in Permit requirements. Such list, as updated from time to
time, shall set forth the projected dates of filing for such Permits and an
estimate of when such Permits are expected to be obtained. Without limiting
Contractor's liabilities in respect of Sub-Articles 7(B) and 7(C), Contractor
shall have no liability in respect of the information furnished under this Sub-
Article.
ARTICLE 8 ROUTE SURVEY
----------------------
A. The Contractor shall conduct the Route Survey and select the cable
route for the System in accordance with the information in the Final Survey
Report. Contractor shall be permitted to make changes, at its discretion, to the
route selection, if necessary for operational reasons without additional cost to
Purchaser.
21
B. Any changes to the route selection requested by Purchaser shall be
treated as a Contract Variation in accordance with Article 6 (Contract
Variations).
ARTICLE 9 ACCEPTANCE
--------------------
A. General
1. The Acceptance Testing shall be performed by the Contractor. The
Purchaser and its designated representatives (including the
Independent Engineer) may observe, at their own expense, the
Contractor's tests and review the test results. Purchaser may
request and conduct any additional tests, at its own expense, but
any delay caused by such process shall be a Force Majeure event.
2. Until the Date of Final Acceptance of the System or if a System
Upgrade is requested by Purchaser, the Date of Final Acceptance
of such System Upgrade, the Purchaser agrees to allow Contractor
access to all Segments of the System.
3. The Purchaser shall issue a Certificate of Commercial Service in
accordance with the provisions of Sub-Article 9(D)(1).
4. Once a Segment of the System, the System, or a System Upgrade is
Ready for Provisional Acceptance, the Purchaser shall issue a
Certificate of Provisional Acceptance.
5. Once the System or a System Upgrade is Ready for Final
Acceptance, the Purchaser shall issue a Certificate of Final
Acceptance.
6. The Purchaser shall not unreasonably withhold or delay issuance
of a Certificate of Commercial Service, a Certificate of
Provisional Acceptance or a Certificate of Final Acceptance.
7. The Contractor agrees that the Date of Provisional Acceptance or
Commercial Service of the System will occur by November 30, 1998
(as such date may be extended under Article 6 (Contract
Variations), Article 17 (Force Majeure) or otherwise under this
Contract or by agreement of the Parties, the "Scheduled RFS
Date"). The Contractor shall use reasonable efforts to be Ready
for Provisional Acceptance or Commercial Service with respect to
Segment 1 with a capacity of 5Gb/s per fiber pair by May 31,
1998.
8. The Date of Commercial Service, Provisional Acceptance and Final
Acceptance, as the case may be, shall be deemed to have occurred
with respect to a Segment, the System or a System Upgrade if a
Certificate
22
of Commercial Service, a Certificate of Provisional Acceptance or
a Certificate of Final Acceptance is issued with respect thereto.
B. Notice of Acceptance or Rejection
1. Within thirty (30) days of receipt by Purchaser and Independent
Engineer of the Commissioning Report or Upgrade Commissioning
Report, as the case may be, the Purchaser must issue notification
to the Contractor of the following:
(a) issuance of a Certificate of Provisional Acceptance in
accordance with Sub-Article 9(C); or
(b) rejection of a Certificate of Provisional Acceptance, but
instead issuance of a Certificate of Commercial Service in
accordance with Sub-Article 9(D) below; or
(c) rejection of the Segment, the System or System Upgrade in
its existing condition and issuance of neither a Certificate
of Provisional Acceptance nor a Certificate of Commercial
Service, with a written explanation of reasons for
rejection.
If the Purchaser (or the Independent Engineer on its behalf)
fails to respond with such notification within thirty (30) days,
then the Date of Provisional Acceptance of the Segment, the
System or System Upgrade shall be deemed to be the date such
Commissioning Report or Upgrade Commissioning Report, as the case
may be, was received by the Purchaser.
2. On receipt of a notice from the Purchaser pursuant to Sub-
Articles 9(B)(1)(b) or (c) above, the Contractor shall be
entitled to address any disputes and explain any discrepancies to
the Purchaser regarding the results of the Acceptance Testing.
Unless Purchaser, for good cause, rejects such explanation, it
shall issue a new notice pursuant to Sub-Article 9(B)(1) above,
which shall be deemed to have been issued on the date of the
original notice.
3. In case of rejection, and if the explanation by the Contractor
as in Sub-Article 9(B)(2) above is not accepted, for good cause,
by the Purchaser, the Contractor shall carry out the necessary
corrective actions and will effect a new series of Acceptance
Testing ("Retesting"). After receipt by Purchaser and Independent
Engineer of the new Commissioning Report or Upgrade Commissioning
Report, as the case may be, describing the results of Retesting,
the Purchaser will be granted a new period of thirty (30) days to
analyze the new Report according to the provisions of Sub-Article
9(B)(1) and any new notice
23
of the Purchaser shall apply from the date the Purchaser receives
such new Commissioning Report or Upgrade Commissioning Report, as
the case may be.
C. Provisional Acceptance
1. The Certificate of Provisional Acceptance may have annexed to it
a list of any outstanding deficiencies to be corrected by the
Contractor.
2. The Contractor shall, as soon as reasonably practicable, correct
such deficiencies and complete the Work or Upgrade Work indicated
on all such listed items so as to comply in all material respects
with the requirements of this Contract, provided that the
Purchaser allows Contractor the necessary access to the
Segment(s) as the Contractor needs to correct such deficiencies
and complete the Work or Upgrade Work. The Contractor shall give
the Purchaser reasonable notice of its requirement for such
access.
D. Commercial Service
1. A Certificate of Commercial Service shall be issued by Purchaser
with respect to a Segment, the System or System Upgrade if the
results of the Acceptance Testing demonstrate that such Segment,
the System or such System Upgrade does not justify the issuance
of a Certificate of Provisional Acceptance, but nevertheless,
such Segment, the System or such System Upgrade is Ready for
Commercial Service.
2. Each Certificate of Commercial Service shall have annexed to it a
mutually agreed list of all outstanding items to be completed by
the Contractor.
3. The Contractor shall, as soon as reasonably practicable, remedy
the outstanding items, provided that the Purchaser allows
Contractor the necessary access to the Segment(s) as the
Contractor needs to remedy such outstanding items. The Contractor
shall give the Purchaser reasonable notice of its requirement for
such access. Notwithstanding the above, provided that Contractor
has been allowed access to the Segment(s) as required in Sub-
Article 9(A)(2), the Contractor shall continue to carry the risk
of loss for any outstanding item until such item is no longer
outstanding.
4. When the outstanding items referenced in Sub-Article 9(D)(3)
above have been remedied, and the Segment(s) or System Upgrade is
otherwise Ready for Provisional Acceptance, the Purchaser will
promptly issue a Certificate of Provisional Acceptance.
24
5. The issuance of a Certificate of Commercial Service with respect
to a Segment or System Upgrade shall in no way relieve the
Contractor from its obligation to provide a Segment or System
Upgrade conforming with the Performance Requirements at the time
of the issuance of a Certificate of Commercial Service.
E. Final Acceptance
1. Within thirty (30) days of the date of receipt by Purchaser and
Independent Engineer of the Final Commissioning Report, the
Purchaser shall issue a Certificate of Final Acceptance or reject
such Report. If the Purchaser neither issues a Certificate of
Final Acceptance nor rejects such Report within such thirty (30)
day period, then the Date of Final Acceptance of the System shall
be deemed to be the date such Final Commissioning Report was
received by the Purchaser.
F. Title and Risk of Loss
1. Upon payment of all amounts listed in the Billing Schedule with
respect to a Segment (other than in the case of a Phase 2
Segment, the Retainage with respect thereto) and the issuance of
a Certificate of Commercial Service or a Certificate of
Provisional Acceptance with respect to such Segment by the
Purchaser in accordance with this Contract, title (free and clear
of all liens deriving through or from Contractor (including any
subcontractor)) to such Segment shall vest in the Purchaser.
2. Upon (i) payment of all amounts listed in the Billing Schedule
with respect to the System (other than the Retainage) and the
issuance of the Retainage Letter of Credit and (ii) the issuance
of a Certificate of Commercial Service or a Certificate of
Provisional Acceptance with respect to the System by the
Purchaser in accordance with this Contract, title (free and clear
of all liens deriving through or from Contractor (including any
subcontractor)) to the System shall vest in the Purchaser.
3. Upon payment of the Upgrade Price with respect to a System
Upgrade and the issuance of a Certificate of Commercial Service
or a Certificate of Provisional Acceptance with respect to such
System Upgrade by the Purchaser in accordance with this
Contract, title to such System Upgrade shall vest in the
Purchaser.
4. As from the date of vesting of title in a Segment, the System or
a System Upgrade, the Purchaser shall, except as set forth in
the following sentence, assume the risk of loss in respect of
all parts of such Segment, the System or System Upgrade and
responsibility for its maintenance. As stated in Sub-Article
9(A)(2), the Contractor will be
25
allowed access to such Segment, and, so long as the Contractor
has been allowed access to such Segment as may be required, the
Contractor shall continue to carry the risk of loss with respect
of each item outstanding under Sub-Article 9(C)(1) and 9(D)(2)
until such item is no longer outstanding.
ARTICLE 10 WARRANTY
--------------------
A. The Contractor warrants that the System and each System Upgrade,
including its spares, shall be free from defects in supplies, workmanship and
design for a period of * years commencing from the Date of Provisional
Acceptance of the System or such System Upgrade, as the case may be,
(hereinafter Warranty Period" and "Upgrade Warranty Period"), with Ship Costs
being covered for the first two * of the Warranty Period (the "Ship Period") and
the Purchaser being responsible for all Ship Costs thereafter.
1. During the Warranty Period for the System or the Upgrade Warranty
Period for a System Upgrade, the Contractor shall make good, by
repair or replacement, at its sole option, any defects in the
System or such System Upgrade, as the case may be, including any
spares, which may become apparent or be discovered due to
imperfect workmanship, faulty design or faulty material supplied
by the Contractor, or any act, neglect or omission on the
Contractors part.
(a) If at any time within the Warranty Period or the Upgrade
Warranty Period for a System Upgrade any defect occurs which
causes the System or such System Upgrade, as the case may
be, to fail to meet its overall Performance Requirements,
the Contractor shall repair or replace such part or parts.
In making such repairs, Contractor may make changes to the
System or such System Upgrade, as the case may be, or
substitute equipment of later or comparable design, provided
the changes, modifications, or substitutions under normal
and proper use do not cause the System or such System
Upgrade as the case may be to fail to meet the Performance
Requirements.
(b) The Contractor shall use reasonable efforts to minimize the
period of time that any Segment or the System is out of
service for testing and repair. The Purchaser agrees to
cooperate with the Contractor to facilitate the Contractor's
repair activity.
(c) In the event that the Contractor fails to make the repair or
to make reasonable efforts to minimize the period of time
that the System is out of service for repair, the Purchaser
may repair the System or the System Upgrade and the
Contractor shall reimburse the Purchaser for Non-Ship Costs
and, with respect to any such repair relating to a defect
identified in good faith by
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
26
Purchaser in writing prior to the end of the Ship Period,
Ship Costs.
(i) The Contractor shall be given advance notice and be
entitled to have a representative on board ship to
observe at sea repairs and shall be given the earliest
possible notice of any such repair.
(ii) Subject to the foregoing, any repair by the Purchaser
shall not in any way diminish the Contractor's
obligation under the warranty. Any equipment discovered
to be defective or faulty and recovered during a
warranty repair shall be returned to the Contractor at
its request.
2. Contractor shall bear the Ship Costs of only those repairs of the
defects identified in good faith by Purchaser in writing prior to
the end of the Ship Period. However, the Contractor shall bear
the Non-Ship Costs of each repair, replacement or improvement
required during the Warranty Period.
As used herein, "Ship Cost" means the costs of operating a
vessel, including but not limited to running and standing charges
for the vessel (including but not limited to labor charges for
the vessel's crew, at sea insurance, port charges, fuel and lube
oils, consumables, cable loading, cable unloading, navigation and
Marisat) as well as the costs associated with the use and
operation of the SCARAB and the sea bed tractor, and "Non-Ship
Costs" means the costs of making a repair, including the cost of
components, equipment or materials requiring replacement, the
cost of any additional equipment necessary to effect the repair,
the cost of making the repair, including the cost of reburying
any previously buried portion, the cost of labor and engineering
assistance or development required to make the repair and all
necessary associated costs, such as, but not limited to, shipping
and customs and services that may be required to make the repair,
but excluding any of the foregoing which are Ship Costs.
3. The Contractor shall effect all warranty repairs of the System
and shall supply all necessary repair materials. However, the
Contractor may use, with the consent of the Purchaser, which
shall not be unreasonably withheld, the materials needed to
effect a repair from the Purchaser's available spare materials.
The Contractor shall promptly replace in kind such materials
supplied from the Purchaser's spare materials, or at the option
of the Purchaser, reimburse the Purchaser for such materials at
its original purchase price. The replacement of or reimbursement
for such materials shall be made at a time mutually agreed to by
the Purchaser and the Contractor.
27
4. The Contractor warrants that services furnished hereunder will be
performed in a workmanlike manner using materials free from
defects except when such materials are provided by the Purchaser
(it being understood that all materials arranged for directly by
Contractor, whether or not purchased in the name of Purchaser,
are not materials provided by the Purchaser). If such services
prove to be not so performed and Purchaser notifies the
Contractor within six (6) months from the completion of the
service, the Contractor will promptly correct the defect.
5. Any part which replaces a defective part during the applicable
Warranty Period or Upgrade Warranty Period, shall be subject to
the remaining Warranty Period and Ship Period, if any, or Upgrade
Warranty Period, as the case may be, of the part which was
replaced. However, the Warranty Period shall never exceed five
(5) years from the Date of Provisional Acceptance of the System
and the Upgrade Warranty Period for any System Upgrade shall
never exceed five (5) years from the Date of Provisional
Acceptance of such System Upgrade. Further, Ship Costs shall be
included only with respect to defects identified in good faith by
Purchaser in writing during the first two (2) years from the Date
of Provisional Acceptance of the System.
B. *
C. The warranties provided above in Sub-Articles 10(A) and (B) by the
Contractor shall not apply to defects or failures of performance, which result
from damage caused by acts or omissions of the Purchaser or its agents,
employees or representatives or third parties (other than the Contractor), or
which result from modifications, misuse, neglect, accident or abuse, repair,
storage or maintenance by other than the Contractor or its agents, use in a
manner not in accordance with the System Description, or other causes beyond the
control of or without the fault of the Contractor or its employees, agents or
subcontractors including, but not restricted to, causes set forth in Article 12
(Purchaser's Obligations) or Article 17 (Force Majeure) hereof.
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
28
D. THE FOREGOING WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ALL OTHER
EXPRESS AND IMPLIED WARRANTIES INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WHICH ARE SPECIFICALLY
DISCLAIMED. THE PURCHASER'S SOLE AND EXCLUSIVE REMEDY UNDER THIS ARTICLE SHALL
BE THE CONTRACTOR'S OBLIGATION TO MAKE REPAIRS OR REPLACEMENTS AS SET FORTH IN
THIS ARTICLE.
E. The Contractor shall, in accordance with its normal operating
practices, investigate any defective part or parts repaired or replaced pursuant
to this Article 10 to determine the type of defect and the cause of failure of
the part or parts. The Contractor shall provide a written report to the
Purchaser on the results of the investigation, if any.
ARTICLE 11 CONTRACTOR SUPPORT
------------------------------
A. For a period of ten (10) years from the applicable Date of Provisional
Acceptance or Date of Commercial Service of the System whichever is earlier, the
Contractor will make available to the Purchaser replacement parts and repair
service for the System as may be reasonably necessary for its operation,
maintenance or repair. Where identical parts cannot be supplied, the Contractor
shall provide fully compatible parts with characteristics equal or superior to
those originally provided by the Contractor. Such parts and services shall be
provided under commercially reasonable conditions of price and delivery.
B. Notwithstanding Sub-Article 11(A), if for any reason the Contractor or
Contractor's suppliers intend to cease or ceases manufacturing or having
manufactured identical or fully compatible replacement parts, the Contractor
shall use reasonable efforts to give one year's prior written notice to the
Purchaser to allow the Purchaser to order from the Contractor any required
replacement parts and shall provide full details of the arrangements to provide
equivalents.
ARTICLE 12 PURCHASER'S OBLIGATIONS
-----------------------------------
A. Purchaser agrees to pay all amounts payable by it when due under this
Contract and to perform all of its other obligations under this Contract.
B. In the event the Purchaser establishes a branch office in any of the
relevant jurisdictions, the Purchaser shall be solely responsible to perform all
activities necessary to establish such branch office.
C. If any loss, damage, delay or failure of performance of the System or
a System Upgrade results from the Purchaser's failure to perform its obligations
under this Contract and results in an increase in the costs of performance or
the time required for performance of any of the Contractor's duties or
obligations under this Contract, the Contractor shall be entitled, as
appropriate, to (i) an equitable adjustment in the Contract Price or applicable
Upgrade Price, (ii) an equitable extension of time for completion of its Work or
the Upgrade Work, (iii) reimbursement for all such additional costs incurred,
and (iv) to the extent necessary in
29
light of Purchaser's failure and the adjustments made in accordance with clauses
(i), (ii) and (iii) above, an equitable adjustment of the Work and/or Upgrade
Work.
1. The Contractor shall inform the Purchaser promptly of any
occurrence covered under this Sub-Article 12(C), and shall use
reasonable efforts to minimize any such additional costs or
delay.
2. The Contractor shall promptly provide to the Purchaser an
estimate of the anticipated additional costs and time required to
complete the Work or Upgrade Work and request relief from
contractual obligations or duties, as appropriate. Purchaser
shall, upon notification, make advance payment to Contractor for
the estimated amount of anticipated additional costs; provided
--------
that Purchaser may deposit such amount into the Dispute Account
and Sub-Article 5(C)(5) shall apply. Contractor shall without
limiting Purchaser's obligations in the foregoing sentence,
discuss such costs with Purchaser upon Purchaser's request.
3. As soon as reasonably practicable after the actual costs become
known to the Contractor, the Contractor shall provide a statement
of such actual costs to the Purchaser.
4. If the estimated amount is greater than the amount of actual
costs, then the Contractor shall reimburse the Purchaser. If the
amount of actual costs incurred is greater than the estimated
amount, then the Purchaser shall reimburse the Contractor for any
shortfall in accordance with Article 5 (Terms of Payment of
Purchaser).
ARTICLE 13 TERMINATION FOR DEFAULT
-----------------------------------
A. Either Party may, by written Notice of Termination for Default,
immediately upon receipt or such later date as specified in the notice,
terminate the whole or any part of this Contract in any one of the following
circumstances (each an "Event of Default"):
1. In the case of the Purchaser, if Contractor materially fails to
comply with the terms and conditions of this Contract and, if
such failure occurs prior to the Date of Commercial Service or
the Date of Provisional Acceptance, it would not be reasonable to
believe that the Contractor will be able to provide the System
which is Ready for Commercial Service or Provisional Acceptance,
as the case may be, within 200 days after the Scheduled RFS Date;
2. If the other Party defaults on any of its payment obligations
(or, in the case of the Contractor, if the amount in the
Contingency Account is less than the amount initially deposited
therein) and does not cure such default (or does not increase the
amount on deposit in the Contingency Account to the amount
initially deposited therein or provide the
30
Contractor with a letter of credit for such deficiency in form
and substance and issued by a bank reasonably satisfactory to
Contractor) within a period of thirty (30) days (or such longer
period as the non-breaching Party may authorize in writing) after
receipt of written notice demanding cure;
3. If the other Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part
of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or
shall take any corporate action to authorize any of the
foregoing;
4. If an involuntary case or other proceeding shall be commenced
against the other Party seeking liquidation, reorganization or
other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a
period of 45 days; or an order for relief shall be entered
against the other Party.
B. If this Contract is terminated by the Purchaser as provided in Sub-
Article 13(A), the Purchaser, in addition to any other rights provided in this
Article and upon payment to Contractor of all monies due and owing as set forth
in Sub-Article 13(C) below, may require the Contractor to transfer title and
deliver to the Purchaser in the manner and to the extent directed by the
Purchaser any completed equipment, material or supplies, and such partially
completed cable and materials, parts, tools, dies, jigs, fixtures, plans,
drawings, information, and contract rights (hereinafter collectively
"Manufacturing Materials") as the Contractor has had specifically produced or
specifically acquired for the performance of such part of this Contract as has
been terminated and which, if this Contract had been completed, would have been
required to be furnished to the Purchaser; and the Contractor shall, upon the
direction of the Purchaser, protect and preserve property in the Contractor's
possession in which the Purchaser has an interest.
C. If the Contract is terminated by Contractor as provided in Sub-Article
13(A), the Purchaser shall pay the total of:
1. the Contract Price (or after the Date of Final Acceptance of the
System, if a System Upgrade has been selected, the Upgrade Price)
less (a) the portion of the Contract Price or Upgrade Price paid
by Purchaser to
31
Contractor under the Billing Schedule and (b) costs that will not
be incurred because of the termination;
2. the cost of settling and paying claims rising out of the
termination of Work under the contracts in orders, as provided in
Sub-Article 13(C)(3) below which are properly chargeable to the
terminated portion of this Contract; and
3. the reasonable costs of settlement including accounting, legal,
clerical and other expenses necessary for the preparation of
settlement claims and supporting data with respect to the
terminated portion of this Contract and for termination and
settlement of contracts thereunder, together with reasonable
storage, transportation and other costs incurred in connection
with the protection, preservation and disposition of property
proper to this Contract as well as additional costs incurred due
to Purchaser's Default.
D. Force Majeure events pursuant to Article 17 (Force Majeure) shall not
constitute a default or provide a basis for termination under this Article.
E. Regardless of any termination of this Contract as provided in Sub-
Article 13(A), neither Party shall be relieved from any liability for damages or
otherwise which may have been incurred by reason of any breach of this Contract.
F. Without limitation to the foregoing, in the event that Purchaser
terminates this Contract pursuant to Sub-Article 13(A), the Contractor shall be
liable to Purchaser (without duplication) for the total of all costs and
expenses reasonably incurred by Purchaser in completing the Work or in
correcting deficiencies in the Work to the extent that the payments made to
Contractor pursuant to this Contract, together with such costs and expenses,
exceed the Contract Price.
ARTICLE 14 TERMINATION FOR CONVENIENCE
---------------------------------------
A. The performance of Work under this Contract may be terminated by the
Purchaser in whole, or in part, at its discretion. The Purchaser shall deliver
to the Contractor a written notice specifying the extent to which performance of
Work under this Contract is terminated, and the date upon which such termination
becomes effective (a "Notice of Termination"). Upon termination, the Purchaser
will make payment to Contractor of all monies due and owing as set forth in Sub-
Article 14(D) below.
B. After receipt of such Notice of Termination, and except as otherwise
directed by the Purchaser, the Contractor shall:
1. Stop Work under this Contract on the date and to the extent
specified in the Notice of Termination;
32
2. Place no further orders or contracts for materials, services or
facilities except as may be necessary for completion of such
portion of Work under this Contract as is not terminated;
3. Use reasonable efforts to terminate all orders and contracts to
the extent that they relate to the performance of Work terminated
by the Notice of Termination;
4. Assign to the Purchaser, in the manner, at the time, and to the
extent directed by the Purchaser, all of the Contractor's rights,
title and interest under the orders and contracts so terminated;
5. Use reasonable efforts to settle all outstanding liabilities and
all claims arising out of such termination of orders and
contracts, with the Purchaser's approval or ratification to the
extent required;
6. Transfer title and deliver to the Purchaser in the manner, at the
time and to the extent (if any) directed for the fabricated or
unfabricated parts, work in process, completed work, supplies and
other material produced as a part of, or acquired in connection
with, the performance of the Work terminated by the Notice of
Termination;
7. Use reasonable efforts to sell, in the manner, at the time, to
the extent and at the price or prices directed or authorized by
the Purchaser, any property of the types referred to in Sub-
Article 13(B)(6) above provided, however, that the Contractor:
-------- -------
(a) shall not be required to extend credit to any buyer; and
(b) may acquire any such property under the conditions
prescribed by and at a price approved by the Purchaser;
and provided further that the net proceeds of any such transfer
-------- -------
or disposition shall be applied in reduction of any payments to
be made by the Purchaser to the Contractor under this Contract
or, if no such payments are due, paid in such other manner as the
Purchaser may direct;
8. Complete performance of such part of the Work which was not
terminated by the Notice of Termination; and
9. Take such action as may be necessary, or as the Purchaser may
reasonably direct, for the protection and preservation of the
property related to this Contract which is in the Contractor's
possession and in which the Purchaser has acquired or may acquire
an interest.
33
C. After such Notice of Termination, the Contractor shall submit to the
Purchaser a written termination claim. Such claim shall be submitted promptly,
but, unless otherwise extended, in no event later than six months from the
effective date of termination.
D. In the settlement of any such partial or total termination claim, the
Purchaser shall pay to the Contractor the total of:
1. (i) if the Contract is terminated in whole under this Article 14
prior to the Payment Escrow Date, all amounts invoiced in
accordance with the Contract plus, for Work or Supplies which
have not been invoiced, an amount calculated by reference to the
prices set forth in the Provisioning Schedule and to the amount
of such Work or Supplies done or provided and (ii) in all other
cases, the Contract Price (or after the Date of Final Acceptance
of the System, if a System Upgrade has been selected, the Upgrade
Price) less (a) the portion of the Contract Price or Upgrade
Price paid by Purchaser to Contractor under the Billing Schedule
allocable to the terminated Segment(s) of the System or System
Upgrade, (b) the portion of the Contract Price allocable to the
unterminated Segment(s) of the System and (c) costs that will not
be incurred because of the termination.
2. the cost of settling and paying claims rising out of the
termination of Work under the contracts in orders, as provided in
Sub-Article 14(D)(4) below which are properly chargeable to the
terminated portion of this Contract; and
3. the reasonable costs of settlement including accounting, legal,
clerical and other expenses necessary for the preparation of
settlement claims and supporting data with respect to the
terminated portion of this Contract and for termination and
settlement of contracts thereunder, together with reasonable
storage, transportation and other costs incurred in connection
with the protection and disposition of property proper to this
Contract.
E. In arriving at the amount due to the Contractor under this Article 14,
all unliquidated payments made to the Contractor, any liability which the
Contractor may have to the Purchaser, and the agreed price for, or the proceeds
of sale of any materials, supplies or other things acquired by the Contractor or
sold, pursuant to the provisions of this Article 14, and not otherwise recovered
by or credited to the Purchaser shall be deducted.
F. In addition, if the Contract is only partially terminated, prior to
the settlement of the terminated portion, the Contractor may file with the
Purchaser a request in writing for an equitable adjustment of the Contract Price
for the portion of the Contract not terminated by the Notice of Termination, and
the Purchaser shall grant Contractor an equitable adjustment to the Contract
Price, which shall be reflected in the Provisioning Schedule, Appendix 1.
34
G. The Purchaser may, from time to time, under such terms and conditions
as they prescribe approve partial payments and payments on account against costs
incurred by the Contractor in connection with the terminated portion of this
Contract. If such payments total in excess of the amount finally agreed or
determined to be due under this Article 14, such excess shall be refunded, upon
demand, by the Contractor to the Purchaser.
H. For a period of one year after final settlement under this Contract,
the Contractor shall preserve and make available to the Purchaser at reasonable
times at the Contractor's office, but without direct charge to the Purchaser,
all supporting books, records and documents required to be kept relating to the
terminated Work.
ARTICLE 15 SUSPENSION
----------------------
A. The Purchaser may, at its convenience, order the Contractor to suspend
all or part of the Work for such period of time as the Purchaser determines to
be appropriate. If, as a result of such Suspension, the Contractor incurs
additional costs or losses in the discharge of its responsibilities under this
Contract, and where such suspension, losses or costs are not caused by the
Contractor's act or omission and could not have been reasonably prevented by the
Contractor, the Contractor shall be allowed an equitable adjustment to the
Contract Price or the Provisioning Schedule in Appendix 1 and an equitable
extension in the time required for performance.
B. Upon the occurrence of:
(i) (A) a Default by the Purchaser, (B) receipt by Purchaser prior
to the Date of Final Acceptance of a notice of a Financing Event of Default
or (C) on or prior to the Date of Final Acceptance, a failure to satisfy
the conditions precedent under a Financing Document which results in a
failed funding thereunder;
(ii) the termination without in each case reasonably satisfactory
replacement of (A) the CIBC Commitment Letter or (B) prior to the Date of
Final Acceptance (or if all of the notes contemplated to be sold under the
Holding Company Note Purchase Agreement have been sold, prior to the
repayment in full of all amounts outstanding thereunder), the Holding
Company Note Purchase Agreement, unless in each case, such failure is due
to the failure of the Contractor to perform its obligations when required
hereunder;
(iii) the failure to (A) consummate the transactions contemplated
in the CIBC Commitment Letter on substantially the terms set forth in the
summary of terms and conditions attached thereto and with definitive
documentation consistent with the terms of such summary, except for
inconsistencies with respect to terms which are either not material to the
interests of the Contractor or not adverse to the interests of the
Contractor and (B) make a draw under the Working Capital Facility referred
to therein, in each case on or prior to the date three months from the date
hereof unless the delay is due to the failure of the Contractor to perform
its obligations when required hereunder;
35
(iv) the failure of Holding Company to make a draw contemplated by
the Note Purchase Agreement and contribute the net proceeds thereof to
Purchaser or of Purchaser to immediately deposit such net proceeds (net of
mutually agreed upon construction and development expenses of the
Purchaser) into the Payment Account, in each case prior to the time needed
by Purchaser to pay its obligations under this Contract;
(v) any transfer prior to the Date of Final Acceptance of any
portion of the System except in accordance with Article 37;
(vi) any supplement executed by a Transferee shall not be in full
force and effect;
(vii) the amendment of any Financing Document without Contractor's
consent, unless such amendment is with respect to terms which are either
not material to the interests of the Contractor or not adverse to the
interests of the Contractor;
(viii) the termination or reduction of the commitments or the
prepayment of any loans under the Financing Documents if the remaining
commitments, together with amounts on deposit in the Payment Account and
the Contingent Account, would not be sufficient to pay the remaining unpaid
portion of the Contract Price;
the Contractor, in addition to any other rights provided in Article 13, may
suspend performance of its obligations and all Work and (in the case of clause
(i)) Upgrade Work. Purchaser shall deliver a copy of each notice of default or
event of default simultaneously with the delivery thereof to any party to any
Financing Document and shall promptly notify Contractor of the occurrence of any
of the foregoing items listed in clauses (i) through (viii) above or of any
failure to satisfy any condition under any Financing Document which results in a
failed funding thereunder, and Purchaser shall deliver to Contractor a copy of
each Financing Document (other than the Holding Company Note Purchase Agreement
and the Financing Documents relating solely thereto) and each amendment to such
Financing Documents which has an impact on the Contractor promptly after
execution thereof.
C. Every forty-five (45) days, during the period of Suspension,
the Parties shall meet formally and review the circumstances surrounding the
Suspension including without limitation, the anticipated date of re-commencing
Work.
D. Thereafter, if the Suspension continues for a total of one
hundred and eighty (180) days, the Contractor may terminate the Contract by
notice to the Purchaser and the Contract shall be deemed to have been terminated
by Purchaser, effective on the date of Contractor's notice, in accordance with
Sub-Article 13(A) and the remaining provisions of Article 13 shall apply.
ARTICLE 16 TITLE AND RISK OF LOSS
----------------------------------
A. Except as provided in Article 18 (Intellectual Property),
Article 20 (Safeguarding of Information and Technology) and Article 21 (Export
Control), title to all
36
Supplies provided by the Contractor hereunder for incorporation in or attachment
to a Segment shall pass to and vest in the Purchaser in accordance with Article
9 (Acceptance). Risk of loss or damage to all Supplies provided by the
Contractor for incorporation in or attachment to such Segment shall pass to and
vest in the Purchaser in accordance with Article 9. Upon termination of this
Contract pursuant to Article 13 (Termination for Default) or 14 (Termination for
Convenience), the Purchaser may require, upon full payment of all amounts due
thereunder (provided that, without limiting Purchaser's obligation to make any
--------
such payment, if this Contract is terminated by Purchaser because of a
Bankruptcy Event full payment shall not be required prior to the transfer of
title), that title to the equipment, materials and supplies, which has not
previously passed to the Purchaser, pass to the Purchaser, free and clear of all
liens, claims, charges and other encumbrances deriving through or in connection
with the Contractor or any supplier or sub-contractor of the Contractor.
B. Upon the passage of title in accordance with the terms of Article 13
(except a transfer described in the proviso of the last sentence of Sub-Article
16(A)), the Contractor warrants that all parts, materials, and equipment to
which title has passed will be free and clear of all liens, claims, charges and
other encumbrances deriving through or in connection with the Contractor or any
supplier or sub-contractor of the Contractor.
ARTICLE 17 FORCE MAJEURE
-------------------------
A. The Contractor shall not be responsible for any loss, damage, delay or
failure of performance resulting directly or indirectly from any cause which is
beyond its reasonable control ("Force Majeure"), including but not limited to:
delay in obtaining or failure to obtain any Permits; acts of God or of the
public enemy; acts or failure to act of any governmental authority; war or
warlike operations, civil war or commotion, mobilizations or military call-up,
and acts of similar nature; revolution, rebellions, sabotage, and insurrections
or riots; fires, floods, epidemics, quarantine restrictions; strikes, and other
labor actions; freight embargoes; unworkable weather; trawler or anchor damage;
damage caused by other marine activity such as fishing, marine research and
marine development; general unavailability of any raw materials or components;
acts or omissions of transporters; or the acts or failure to act of any of the
Purchaser, of its representatives or agents, provided that (i) a loss by
--------
Contractor of employees (other than by reasons of Force Majeure), (ii) strikes
and other labor actions involving the Contractor's own work force, (iii) the
first 5 days of unworkable weather (unless any such day occurs during the 30
days immediately preceding the then Scheduled RFS Date), (iv) the failure (other
than by reason of force majeure) of any subcontractor, supplier or transporter
to perform its obligations to Contractor (including on account of insolvency)
unless such supplies or transportation or other services are generally
unavailable in the marketplace, (v) the unavailability of any raw materials or
components, unless such raw materials or components are generally unavailable in
the marketplace or are unavailable by reason of force majeure or (vi) any
increase in Contractor's costs shall not in and of itself constitute Force
Majeure.
B. If any such Force Majeure causes an increase in the time or costs
required for performance of any of its duties or obligations, the Contractor
shall be entitled to the
37
following: (i) an equitable adjustment in the Contract Price, (ii) an equitable
extension of time for completion of the Work or the Upgrade Work, as the case
may be, (iii) reimbursement for all such additional costs incurred and (iv) to
the extent necessary in light of such Force Majeure and the adjustments made in
accordance with clauses (i), (ii) and (iii) above, an equitable adjustment to
the Work and/or Upgrade Work; provided that in no event shall the Purchaser be
--------
liable under clause (i) or (iii) of this Sub-Article 17(B) for (a) any loss of
or damage due to Force Majeure, to the extent such loss or damage is required by
Article 27 to be covered by insurance for the benefit of the Contractor or by
self insurance, or is otherwise actually covered by insurance for the benefit of
the Contractor, or (b) the amount by which the replacement cost of physical
assets exceeds the initial cost thereof or the cost of replacement parts
therefor unless such incremental replacement cost is uninsurable, or (c) the
initial cost of any lost or damaged physical assets or the cost of any repair or
replacement thereof (except in the case of replacement, as provided in clause
(b) above) except for losses caused by Purchaser or (d) (without limiting
Purchaser's obligations under any other provision of this Contract) any third
party claims against Contractor.
C. Increase in cost due to Purchaser will be as provided for in Article
12, Purchaser's Obligations.
D. The Contractor shall inform the Purchaser promptly with written
notification, and in all cases within fourteen (14) days of discovery and
knowledge, of any occurrence covered under this Article and shall use its
reasonable efforts to minimize such additional costs or delays. The Contractor
shall promptly provide an estimate of the anticipated additional costs, the time
required to complete the Work or the Upgrade Work and any changes to the Work or
the Upgrade Work, as the case may be. Contractor shall be entitled to an
extension of time equal to at least one day for each day of delay resulting from
the Force Majeure condition. As soon as reasonably practicable after the actual
costs become known to the Contractor, the Contractor shall provide a statement
of such actual costs to the Purchaser. Thereafter, the Purchaser shall reimburse
the Contractor for the actual costs incurred by the Contractor against
submission of corresponding invoices in accordance with Article 5 (Terms of
Payment by Purchaser).
E. Within thirty (30) days of receipt of such a notice from Contractor,
the Purchaser and the Independent Engineer may provide a written response. The
absence of a response shall be deemed as acceptance of Contractor's notice and
request for additional costs and time.
F. If a Force Majeure (other than for failure to procure a Permit through
fault of the Contractor) continues for a total of two hundred (200) days, either
Party may terminate the Contract by notice to the other and the Contract shall
be deemed to have been terminated by Purchaser, prior to the Payment Escrow Date
effective on the date of the terminating Party's notice, in accordance with Sub-
Article 14(A) and the remaining provisions of Article 14 shall apply to such
termination.
38
ARTICLE 18 INTELLECTUAL PROPERTY
---------------------------------
A. Ownership
All right, title, and interest in and to any information, computer or
other apparatus programs, software, specifications, drawings, designs, sketches,
tools, market research or operating data, prototypes, records, documentation,
works of authorship or other creative works, ideas, concepts, methods,
inventions, discoveries, improvements, or other business, financial and/or
technical information (whether or not protectable or registrable under any
applicable intellectual property law) developed by Contractor in the course of
its performance under this Contract, or otherwise furnished by Contractor to
Purchaser as part of the delivery of the System under this Contract, is and
shall remain the sole property of Contractor (hereinafter individually and
collectively referred to as "Intellectual Property"). Unless otherwise expressed
in this Contract, no license is implied or granted herein to Purchaser to any
Intellectual Property by virtue of this Contract, nor by the transmittal or
disclosure of any such Intellectual Property to Purchaser. Any Intellectual
Property disclosed, furnished, or conveyed to Purchaser that is marked as
"Proprietary" or "Confidential", (or if transmitted orally is identified as
being proprietary or confidential), or under the totality of the circumstances
ought to reasonably be treated as being proprietary or confidential to
Contractor even if not so marked or identified, shall be treated in accordance
with the provision of Article 20 (Safeguarding of Information and Technology).
B. Licenses
Contractor shall furnish to Purchaser, upon the transfer of title to
any portion of the System or a System Upgrade pursuant to Article 9, copies of
all technical information, specifications, drawings, designs, sketches, tools,
operating data, records, documentation and/or other types of engineering or
technical data or information that a person of ordinary skill in the relevant
technical field would consider reasonably necessary to operate, maintain or
repair each component of such portion of the System or System Upgrade as
delivered by Contractor (the "Deliverable Technical Material"). Contractor
grants to Purchaser a perpetual, royalty-free, non-transferable (except under
the circumstances specified in Sub-Article 18(G) below) license to use and
reproduce the Deliverable Technical Materials owned, controlled, or developed by
Contractor to fulfill Purchaser's obligations under this Contract and to use and
operate the System (as upgraded by any System Upgrades) supplied by Contractor
with the right to employ third parties (under appropriate written obligations
respecting confidentiality) to assist Purchaser in fulfilling its obligations
under this Contract and in using and operating the System (as upgraded by any
System Upgrades), but with no right to sublicense. Contractor grants to
Purchaser a perpetual, royalty-free, nontransferable (except under the
circumstances specified in Sub-Article 18(G) below) license to use and reproduce
those portions of Deliverable Technical Materials owned or controlled by third
parties (but only to the extent of any rights which may have been granted to
Contractor by such third parties) to fulfill Purchaser's obligations under this
Contract and to use and operate the System supplied by Contractor with the right
to employ third parties (under appropriate written obligations respecting
confidentiality) to assist Purchaser in fulfilling its obligations under this
Contract and in using and operating the System (as upgraded by any System
Upgrades), but with no
39
right to sublicense. Except as set forth in this provision, no license under
Contractor's patents, copyrights, trade or service marks, trade secrets or other
intellectual property rights protectable under law in the United States or any
foreign country is granted to Purchaser. It is expressly understood that it
shall not be a violation of this license for Purchaser, on its own behalf or
through third parties (under appropriate written obligations respecting
confidentiality) specifically employed for the purpose, to modify the System (as
upgraded by any System Upgrades) or connect the System (as upgraded by any
System Upgrades) to other systems, provided that Purchaser may not use the
Deliverable Technical Materials in achieving such modification or
interconnection for any purpose other than determining the technical
configuration, systems interface and/or interoperability requirements of the
System (as upgraded by any System Upgrades) as delivered by Contractor (subject
to the rights of third parties therein and thereto), and subject to the
limitations on Contractor's obligations as set forth in Articles 10(C) and 19(A)
concerning any such modification or interconnection.
C. Deliverable Software
Contractor shall furnish to the Purchaser, upon transfer of title to
any portion of the System or System Upgrade pursuant to Article 9, copies of all
computer or other apparatus programs and software, in executable form, and
related documentation, where such copies of programs and software shall consist
solely of executable code provided in offline media (e.g., tapes, or diskettes)
for restoration purposes, sufficient to operate, maintain or repair the computer
systems of such portion of the System or System Upgrade, as the case may be, as
delivered by Contractor (the Deliverable Software). Contractor shall furnish to
Purchaser, from time to time during the Warranty Period or any Upgrade Warranty
Period, copies of all computer or other apparatus programs and software, in
executable form, and related documentation, where such copies of programs and
software shall consist solely of executable code provided in offline media for
restoration purposes, that Contractor may develop to correct errors or to
maintain Deliverable Software previously furnished to Purchaser, which shall
also be treated as Deliverable Software for purposes of this Contract upon
delivery thereof to Purchaser. Contractor grants to Purchaser a perpetual,
royalty-free, non-transferable (except under the circumstances specified in Sub-
Article 18(G) below) license to use and reproduce the Deliverable Software
Materials owned, controlled, or developed by Contractor to fulfill Purchaser's
obligations under this Contract and to use and operate the System (as upgraded
by any System Upgrades) supplied by Contractor with the right to employ third
parties (under appropriate written obligations respecting confidentiality) to
assist Purchaser in fulfilling its obligations under this Contract and in using
and operating the System (as upgraded by any System Upgrades), but with no right
to sublicense. Contractor grants to Purchaser a perpetual, royalty-free,
nontransferable (except under the circumstances specified in Sub-Article 1 8(G)
below) license to use and reproduce those portions of Deliverable Software owned
or controlled by third parties (but only to the extent of any rights which may
have been granted to Contractor by such third parties) to fulfill Purchaser's
obligations under this Contract and to use and operate the System (as upgraded
by any System Upgrades) supplied by Contractor with the right to employ third
parties (under appropriate written obligations respecting confidentiality) to
assist Purchaser in fulfilling its obligations under this Contract and in using
and operating the System (as upgraded by any System Upgrades), but with no right
to sublicense. These licenses shall be limited to the right
40
to use Deliverable Software only with the particular type of computer equipment
or substantially similar replacement equipment for which the Deliverable
Software was provided in the System (as upgraded by any System Upgrades) as
supplied by Contractor.
1. Confidentiality
Purchaser shall keep the Deliverable Software confidential in
accordance with Article 20 (Safeguarding of Information and
Technology) and Article 21 (Export Control) and agrees to use its
best efforts to see that its employees, consultants, and agents,
and other users of such software, comply with the provisions of
this Contract. Purchaser also agrees to refrain from taking any
steps, such as reverse assembly or decompilation, to derive a
source code equivalent of any object code that is furnished by
Contractor, provided that Contractor continues to maintain the
Deliverable Software in accordance with the terms of the
Operating, Administration and Maintenance Agreement or is willing
and able to enter into an agreement to maintain the Deliverable
Software upon terms reasonably comparable to the pertinent terms
of Operating, Administration and Maintenance Agreement after the
expiration or termination thereof or does not go insolvent or
bankrupt to thereby trigger *. In the case of insolvency or
bankruptcy of Contractor, Purchaser shall limit any derivation of
a source code equivalent to that portion of the Deliverable
Software that was developed by Contractor. Purchaser shall not
under any circumstances take any steps to derive a source code
equivalent from that portion of the Deliverable Software
comprising commercial, off-the-shelf software developed or
provided by third parties.
2. Backup Copies
Purchaser may make and retain two archive copies of the
Deliverable Software. Any copy will contain the same copyright
notice and proprietary markings as are on the original software
and shall be subject to the same restrictions as the originals.
3. Termination of Software Licenses
In the event of use of Deliverable Software other than that
permitted in Sub-Article 18(C) or any other material breach of
this Article 18 by Purchaser, Contractor, at its option, may
terminate the rights granted to Purchaser pursuant to this
Article, upon written notice to Purchaser. Upon termination,
Purchaser shall either return or destroy, at Contractor's option,
all copies of Deliverable Software furnished under this Contract.
4. Indemnification
In the event of use of Deliverable Software furnished hereunder
other than permitted in Sub-Article 18(C) or any other material
breach of this
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
41
Article 18 by Purchaser, the Purchaser shall indemnify and hold
Contractor harmless from any and all third party claims resulting
therefrom whether arising from a defect in the software or
otherwise.
D. Trademarks, Tradenames, etc.
No rights are granted herein to Purchaser to use any identification
(such as, but not limited to tradenames, trademarks, service marks or symbols,
and abbreviations, contractions, or simulations thereof) owned or used by
Contractor or its parent company and affiliates to identify Contractor or its
parent company and affiliates or any of its products or services. Purchaser
agrees that it will not, without the prior written permission of Contractor, use
such identification in advertising, publicity, packaging, labeling, or in any
other manner to identify itself or any of its products, services, or
organizations, or represent directly or indirectly that any product, service, or
organization of it is a product, service, or organization of Contractor or its
parent company or affiliates, or that any product or service of Purchaser is
made in accordance with or utilizes any Intellectual Property of Contractor or
its parent company or affiliates.
E. DISCLAIMER, LIMITATION OF LIABILITY
CONTRACTOR REPRESENTS THAT ANY INFORMATION OR INTELLECTUAL PROPERTY
FURNISHED IN CONNECTION WITH THIS CONTRACT SHALL BE TRUE AND ACCURATE TO THE
BEST OF ITS KNOWLEDGE AND BELIEF, BUT CONTRACTOR SHALL NOT BE HELD TO ANY
LIABILITY FOR UNINTENTIONAL ERRORS OR OMISSIONS THEREIN. EXCEPT AS EXPRESSLY
PROVIDED, CONTRACTOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSLY OR
IMPLIEDLY. BY WAY OF EXAMPLE, BUT NOT OF LIMITATION, CONTRACTOR AND ITS PARENT
COMPANY AND AFFILIATES MAKES NO REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF INFORMATION OR
INTELLECTUAL PROPERTY DISCLOSED OR PROVIDED HEREUNDER WILL NOT INFRINGE ANY
PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF A THIRD PARTY. CONTRACTOR AND ITS
PARENT AND AFFILIATES SHALL NOT BE HELD TO ANY LIABILITY WITH RESPECT TO ANY
CLAIM BY PURCHASER OR ANY THIRD PARTY CLAIM AGAINST PURCHASER ON ACCOUNT OF, OR
ARISING FROM, PURCHASER'S USE OF INFORMATION OR INTELLECTUAL PROPERTY DISCLOSED
OR PROVIDED BY CONTRACTOR.
F. Joint Development
In the event that the disclosure of Intellectual Property by
Contractor or the exchange of other information results in the creation or
development of new information from the substantial contribution of one or more
of Contractor's employees, agents, or consultants with one or more of
Purchaser's employees, agents, or consultants during the course of this
Contract, then such newly created information shall be subject to the terms of
Article 20 (Safeguarding of Information and Technology). Any such newly and
jointly developed
42
information shall be jointly owned by the Parties. Notwithstanding the above,
the Parties acknowledge and agree that between them the ownership of any newly
created information comprising inventions, discoveries, improvements, conceived,
first reduced to practice, made or developed in anticipation of, in the course
or as a result of Work or Upgrade Work shall be determined in accordance with
Title 35 of the United States Code. With respect to any newly created
information that is patented and jointly owned by the Parties, each Party shall
have equal rights to license such patents or assign their interests to third
parties without accounting to or obtaining the consent of the other Party
hereto. The Parties shall by mutual agreement decide which Party shall file any
United States Patent application. The Party filing such application shall do so
at its own expense and shall have the right to elect to file in any foreign
country it so chooses. Each Party agrees that it will, without charge to the
other, have its employees, agent, consultants or other associates, sign all
papers and do all acts necessary, desirable, or convenient to enable the filing
Party at its expense to file and prosecute applications for patents on such
inventions, discoveries, or improvements, and to maintain patents granted
thereon.
G. Transferability
The license granted to Purchaser by Contractor in the Deliverable
Technical Materials and Deliverable Software are personal and non-transferable,
except that Purchaser may assign or transfer such licenses to an affiliated
entity under common control with the Purchaser or to any entity succeeding to
Purchaser's entire interest in the System (as upgraded by any System Upgrades)
as a result of reorganization or restructuring of the Purchaser or in the event
of a change of control of the Purchaser.
H. *
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
43
*
ARTICLE 19 INFRINGEMENT
------------------------
A. The Contractor agrees to defend or settle at its own expense all suits
for infringement of any patent, copyright, trademark or other form of
intellectual property right in any country of the world, for the use and
operation of the System (as upgraded by any System Upgrades) as supplied by
Contractor and for any component part thereof or material or equipment used
therein (or the manufacture of any material or the normal use thereof) provided
by the Contractor or on its behalf pursuant to this Contract and will hold the
Purchaser harmless from all expense of defending any such suit and all payments
for final judgment assessed on account of such infringement, except such
infringement or claim arising from:
1. The Contractor's adherence to the Purchaser's directions in the
design and configuration of the System (as upgraded by any System
Upgrades) or to use materials, parts or equipment of the
Purchaser's selection; or
2. Such material, parts or equipment furnished to the Contractor by
the Purchaser, other than in each case, items of the Contractor's
design or selection or the same as any of the Contractor's
commercial merchandise or in processes or machines of the
Contractor's design or selection used in the manufacture of such
standard products or parts; or
3. Use of the System (as upgraded by any System Upgrades) or the
materials, parts or equipment furnished by Contractor other than
for the purposes indicated in, or reasonably to be inferred from,
this Contract or in conjunction with other products; or
4. Modification of the System (as upgraded by any System Upgrades)
or the materials, parts or equipment furnished by the Contractor,
or connection of the System to another system by any person or
entity other than Contractor, without prior expressed written
approval by Contractor.
B. The Purchaser will, at its own expense, defend all suits against the
Contractor for such excepted infringement and hold the Contractor harmless from
all expense of defending any such suit and from all payments by final judgment
assessed against the Contractor on account of such excepted infringement.
C. The Contractor and the Purchaser agree to give each other prompt
written notice of claims and suits for infringement, full opportunity and
authority to assume the sole defense, including appeals and, upon request and at
its own expense, the other agrees to furnish all information and assistance
available to it for such defense.
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
44
D. If all or any portion of the System (as upgraded by any System
Upgrades) or any material, part or equipment provided by the Contractor or on
its behalf is held to constitute an infringement (excluding such excepted
infringements specified in Sub-Article 19(A)) and is subject to an injunction
restraining its use or any order providing for its delivery up to or
destruction, or if in respect of any such claim of infringement the Contractor
deems it advisable to do so, the Contractor shall at its own expense either:
1. Procure for the Purchaser the right to retain and continue to use
the System, the affected portion thereof, or any such material,
part or equipment without interruption for the Purchaser;
2. Replace or modify the System, the affected portion thereof, or
any material, part or equipment so that it becomes noninfringing
while continuing to meet the Performance Requirements or
3. If the remedies specified in Sub-Articles 19(D)(1) an 19(D)(2)
are not feasible, refund to the Purchaser the full purchase price
paid for the System, the affected portion thereof, or any
material, part or equipment found to be infringing.
E. In no event shall the Purchaser make any admission or settle any claim
in relation with any claim for infringement without Contractor's consent.
ARTICLE 20 SAFEGUARDING OF INFORMATION AND TECHNOLOGY
------------------------------------------------------
A. In performance of this Contract, it may be mutually advantageous to
the Parties hereto to share certain specifications, designs, plans, drawings,
software, market research or operating data, prototypes, or other business,
financial, and or/technical information related to products, services, or
systems which are proprietary to the disclosing Party or its affiliates (and in
the case of Contractor, Contractor's parent company) (together with this
Contract and related documents, "Information"). The Parties recognize and agree
that Information includes information that was supplied in contemplation hereof
prior to execution of this Contract, and further agree that Information includes
information in both tangible and intangible form.
B. Unless such Information was previously known to the Party receiving
such Information free of any obligation to keep it confidential, or such
Information has been or is subsequently made public through other than
unauthorized disclosure by the receiving Party or is independently developed by
the receiving Party (as documented by the records of the receiving Party), it
shall be kept confidential by the Party receiving such Information, shall be
used only in the performance of this Contract, and may not be used for any other
purposes except upon such terms as may be agreed upon in writing by the Party
owning such Information. The receiving Party may disclose such Information to
other persons, upon the furnishing Party's prior written authorization, but
solely to perform acts which this Article expressly authorizes the receiving
Party to perform itself and further provided such other person agrees in writing
(a copy of which writing will be provided to the furnishing Party at its
request) to the same conditions respecting disclosure and use of Information
contained in
45
this Article and to any other reasonable conditions requested by the furnishing
Party. Nothing herein shall prevent a Party from disclosing Information (a) upon
the order of any court or administrative agency, (b) upon the request or demand
of, or pursuant to any regulation of, any regulatory agency or authority, (c) to
the extent reasonably required in connection with the exercise of any remedy
hereunder and (d) to a Party's legal counsel or independent auditors.
C. The Purchaser may disclose Information to its lenders and their
representatives in connection with obtaining financing for the System, provided
that each such lender or third party enters into a confidentiality agreement
containing terms and conditions similar to those in this Contract. Any such
disclosure of Information shall be subject to the restrictions in Sub-Article
20(B).
ARTICLE 21 EXPORT CONTROL
--------------------------
The Parties acknowledge that any products, software, and technical
information (including, but not limited to, services and training) provided by
either Party under this Contract are or may be subject to export laws and
regulations of the United States and the destination country(ies) and any use or
transfer of such products, software and technical information must be authorized
under those Laws. The Parties agree that they will not use, distribute, transfer
or transmit the products, software or technical information (even if
incorporated into other products) except in compliance with export Laws. If
requested by either Party, the other Party agrees to sign all necessary export-
related documents as may be required to comply with export Laws.
ARTICLE 22 LIQUIDATED DAMAGES
------------------------------
A. If the System is not Ready for Commercial Service or Provisional
Acceptance by the Scheduled RFS Date, as it may have been extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure); or
3. Other arrangements as agreed between the Purchaser and the Contractor
(with 15 days prior notice to the Independent Engineer);
Then Contractor shall pay to Purchaser for each day of delay, for up to 200
days, by way of pre-estimated and liquidated damages for the delay and not as a
penalty, an amount equal to * of the portion of the Initial Contract Price
allocable to the Segment(s) not Ready for Commercial Service (it being
understood for this purpose that each such Segment of the System must have a
capacity of * Gb/s per fiber pair) or Provisional Acceptance.
B. If a System Upgrade is not Ready for Commercial Service or Provisional
Acceptance by the Scheduled Upgrade Date, as it may have been extended under:
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
46
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure); or
3. Other arrangements as agreed between the Purchaser and the Contractor
(with 15 days prior notice to the Independent Engineer);
Then Contractor shall pay to Purchaser for each day of delay, for up to 90
days, by way of pre-estimated and liquidated damages for the delay and not as a
penalty, an amount equal to * of the Initial Upgrade Contract Price.
ARTICLE 23 LIMITATION OF LIABILITY/INDEMNIFICATION
---------------------------------------------------
A. NOTWITHSTANDING ANY OTHER PROVISION IN THIS CONTRACT, AND IRRESPECTIVE
OF ANY FAULT, NEGLIGENCE OR GROSS NEGLIGENCE OF ANY KIND, IN NO EVENT SHALL
EITHER PARTY OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS BE LIABLE
FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, RELIANCE OR SPECIAL (INCLUDING
PUNITIVE) DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUE, LOSS OF
BUSINESS OPPORTUNITY OR THE COSTS ASSOCIATED WITH THE USE OF RESTORATION
FACILITIES RESULTING FROM ITS FAILURE TO PERFORM, PURSUANT TO THE TERMS AND
CONDITIONS OF THIS CONTRACT, PROVIDED THAT THE CONTRACT PRICE LESS COSTS SAVED
(AND IF ANY SYSTEM UPGRADE HAS BEEN SELECTED, THE UPGRADE PRICE LESS COSTS
SAVED) AND ANY LIABILITIES INCURRED BY CONTRACTOR TO THIRD PARTIES IN CONNECTION
WITH THIS CONTRACT SHALL BE DEEMED TO BE DIRECT DAMAGES.
B. EXCEPT AS SET FORTH BELOW IN THE LAST TWO SENTENCES OF THIS SUB-
ARTICLE 23(B), THE CONTRACTOR'S MAXIMUM AGGREGATE LIABILITY, WHETHER IN TORT,
CONTRACT OR OTHERWISE, EXCEPT FOR CLAIMS RELATING TO SYSTEM UPGRADES, SHALL BE
DIRECT DAMAGES PROVEN NOT TO EXCEED * OF THE CONTRACT PRICE. THE CONTRACTOR'S
MAXIMUM AGGREGATE LIABILITY FOR CLAIMS RELATING TO SYSTEM UPGRADES (IF
CONTRACTOR CAN SHOW THAT THE SYSTEM WAS DESIGNED WITH SUFFICIENT TRANSMISSION
MARGIN AND THUS SUCH CLAIMS DO NOT ARISE UNDER CLAUSE (ii) OF SUB-ARTICLE 10(B))
SHALL BE DIRECT DAMAGES PROVEN NOT TO EXCEED * OF THE APPLICABLE UPGRADE PRICE.
THE FOREGOING LIMITATION SHALL NOT APPLY TO CLAIMS UNDER SUB-ARTICLES 19(A) AND
23(C). IF CONTRACTOR CANNOT SHOW THAT THE SYSTEM WAS DESIGNED WITH SUFFICIENT
TRANSMISSION MARGIN FOR A SYSTEM UPGRADE, THE CONTRACTOR'S MAXIMUM AGGREGATE
LIABILITY FOR CLAIMS ARISING UNDER CLAUSE (ii) OF SUB-ARTICLE 10(B) SHALL BE
DIRECT DAMAGES PROVEN NOT TO EXCEED * OF THE APPLICABLE UPGRADEABILITY LIABILITY
LIMIT.
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
47
C. Contractor, at its expense, shall defend, indemnify and hold harmless
Purchaser, its agents, subcontractors and employees against any and all claims,
demands, and judgments for losses due to any act or omission, arising out of, or
in connection with this Contract or, prior to risk of loss passing to Purchaser,
the operation and maintenance of the System, to the extent such losses were
caused by the negligence or willful misconduct of the Contractor, its
subcontractors, employees or agents. The defense, indemnification and save
harmless obligation is specifically conditioned on the following: (i) Purchaser
providing prompt notification in writing of any such claim or demand when it
obtains Actual Knowledge thereof, unless such failure shall not have materially
impaired Contractor's ability to defend against such claim; (ii) Contractor
having control of the defense of any such action, claim or demand and of all
negotiations for its settlement or compromise; and (iii) Purchaser cooperating,
at Contractor's expense, in a reasonable way to facilitate the defense of such
claim or demand or the negotiations for its settlement.
D. Purchaser, at its expense, shall defend, indemnify and hold harmless
Contractor, its agents, subcontractors and employees against any and all claims,
demands, and judgments for losses due to any act or omission, arising out of, or
in connection with this Contract or, after risk of loss passes to Purchaser, the
operation or maintenance of the System, to the extent such losses were caused by
the negligence or willful misconduct of the Purchaser, its subcontractors,
employees or agents (other than AT&T Submarine Systems, Inc.). The defense,
indemnification and save harmless obligation is specifically conditioned on the
following (i) Contractor providing prompt notification in writing of any such
claim or demand when it obtains Actual Knowledge thereof, unless such failure
shall not have materially impaired Purchaser's ability to defend against such
claim; (ii) Purchaser having control of the defense of any such action, claim or
demand and of all negotiations for its settlement or compromise; and (iii)
Contractor cooperating, at Purchaser's expense, in a reasonable way to
facilitate the defense of such claim or demand or the negotiations for its
settlement.
ARTICLE 24 COUNTERPARTS
------------------------
This Contract may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
ARTICLE 25 DESIGN AND PERFORMANCE RESPONSIBILITY
-------------------------------------------------
A. The Contractor shall be solely responsible for the design of and for
all details of the System and the System Upgrades and for the adequacy thereof.
B. The Contractor's responsibility for design of the System and the
System Upgrades shall not in any way be diminished nor shall the Contractor's
design approach be restricted or limited by the Purchaser's acceptance of the
Contractor's guidance or recommendations as to engineering standards and design
specifications, or by the Purchaser's suggestions or recommendations on any
aspect of the design.
48
C. Purchaser shall use reasonable efforts in assisting the Contractor to
obtain in a timely manner accurate information required for the Contractor to
perform the Work and the Upgrade Work, which Contractor cannot expeditiously and
cost-effectively obtain from any source other than the Purchaser.
ARTICLE 26 PRODUCT CHANGES
---------------------------
The Contractor may at any time make changes to the System or System
Upgrades furnished pursuant to this Contract, or modify the drawings and
published specifications relating thereto, or substitute equipment of later
design, provided the changes, modifications, or substitutions under normal and
proper use do not impact upon the form, fit, expected life or function of the
System as provided in the System Performance Requirements.
ARTICLE 27 RISK AND INSURANCE
------------------------------
A. The Contractor shall at all times maintain, and upon request, the
Contractor shall furnish the Purchaser with certificates, or other reasonable
evidence, that Contractor maintains, the following insurance or has adequate
self-insurance (other than as required to comply with any statutory insurance
requirements):
1. Workmen's Compensation and Employers Liability Insurance (with a
limit of not less than * for any one incident or series of
incidents arising from one event or such higher limit as may be
required by the laws of any jurisdiction) covering the officers
and employees of the Contractor for all compensation or other
benefits required of the Contractor by the laws of any nation or
political sub-division thereof to which the Contractor and its
operations under this Contract are subject in respect of injury
of death of any such employee.
2. Comprehensive General Public Liability Insurance, covering
personal injury and/or property damage, with combined single
limits of not less than * for claims of injury or death
of any persons or loss of or damage to property resulting from
any one accident. This insurance to be extended to provide Marine
Comprehensive General Liability including liabilities arising out
of the operation of subsea equipment.
3. Comprehensive Automobile Liability insurance covering all
vehicles and automotive equipment owned, hired, or in the custody
and control of Contractor and complying with all applicable
legislation with limits not less than * combined single
limit for the death or injury of any person per accident and not
less than * for the loss or damage to property resulting
from any one accident.
4. All Risk Insurance in respect of all property of Contractor, its
respective officers, agents and employees connected with the
performance of the Work against all loss or damage from whatever
cause.
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
49
5. Conventional Marine Hull and Machinery Insurance including War
Risks or any vessel(s) owned, operated or chartered by the
Contractor, in an amount equal to the full value thereof. In the
event of damage to or loss of such vessel(s), the Contractor
agrees to look to its insurance carrier for payment of such loss
or damage and hereby releases the Purchaser and waives any claims
against the Purchaser for the loss of such vessel(s) unless due
to the negligence of Purchaser, its agent or representatives
(other than Contractor).
6. All vessels are to be entered in a Mutual Protection and
Indemnity Association with a full and unlimited entry or to have
Marine Protection and Indemnity Insurance with a limit of not
less than * including coverage far illness, injury or
death of crew members (unless covered under Workmen's
Compensation Insurance), Contractual Liability Coverage,
Collision and Tower's Liability, Removal of Wreck and Debris and
Third Party Liability.
7. Excess Liability Coverage over that required in Sub-Articles
27(A)(1), (2) and (3) with minimum limits of * for any
one accident or occurrence.
8. Specialist Operations Insurance with a limit of not less than
* as per London Wording 1993 or equivalent.
9. Transit Insurance including inland, air, and Marine Cargo
coverage including War (other than on land) in an amount
sufficient to cover the expected highest value of any one
shipment. Coverage to include Institute Cargo Clauses, all risks
1.1.63, Institute War Clauses, London Malicious Damage Clause,
and Institute Strikes Riots and Civil Commotion Clauses or their
equivalent.
10. Marine Cargo or equivalent is required to protect, for full cost,
against all risks of physical loss or damage to the plant,
equipment and supplies to be included in the System (other than
War Risks) beginning with when each such item is ready for
shipping and ending when the submersible plant and equipment are
placed overside the cable laying vessel and when the equipment
and supplies are delivered to the cable stations, central
offices, or network operation center. The coverage continues to
cover cable lying on the seabed.
11. Sea Bed or equivalent coverage (including an Old Mines and
Torpedoes Clause, including other derelict weapons of War) is
required to protect, for full cost, against all risks of physical
loss or damage to the submersible plant and equipment described
in Sub-Article 27(A)(10) above. See last paragraph.
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
50
12. War Risks or equivalent coverage is required to protect against
damage to, seizure by and/or destruction of the System by means
of war, piracy, takings at sea and other warlike operations until
discharge of the submersible plant and equipment. For the
purposes of this Article "discharge of the submersible plant and
equipment" shall be deemed to take place when the plant and
equipment reaches the sea bottom, as far as the submersible plant
and equipment is concerned, and when the plant is off-loaded in
the respective terminal country, as far as non-submersible plant
is concerned.
13. Pollution Liability (EIL) insurance for installation operations
and as arising from the use of vessels in an amount not less than
* or such higher sum as may be required to meet any legal
requirement in area of operations.
The Comprehensive General Liability Insurance required pursuant to
Sub-Article 27(A)(2) above, shall include Contractual Liability Coverage which
shall specifically apply to the obligations assumed by the Contractor under the
Terms and Conditions of this Contract.
B. 1. All the foregoing insurances shall be effected with a
creditworthy insurer and shall be endorsed to provide Purchaser
with at least thirty (30) days prior written notice of
cancellation or material change.
2. All the foregoing insurances shall name Purchaser as an
additional insured as to operations hereunder, in which event the
Contractor's insurance shall be primary to any insurance carried
by Purchaser.
3. The limits specified herein are minimum requirements and shall
not be construed in any way as limits of liability or as
constituting acceptance by Purchaser of such responsibility for
financial liabilities in excess of such limits. The Contractor
shall bear all deductibles applicable to any insurance.
4. If it is judicially determined that the monetary limits of
insurance required hereunder or of any indemnity voluntarily
assumed under the Terms and Conditions of this Contact which the
Contractor agrees will be supported either by available liability
insurance or voluntarily self-insured, in part or whole, exceeds
the maximum limits permitted under applicable law, it is agreed
that said insurance requirements or indemnity shall automatically
be amended to conform to the maximum monetary limits permitted
under such law.
5. Contractor shall take reasonable steps to provide that any sub-
contractor engaged by it has in effect or will effect Employer's
Liability, Workmen's Compensation, Hull and Machinery and
Protection and
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
51
Indemnity insurances and any other insurances required by law,
together with such other insurances as the Contractor may
consider necessary.
6. If the Contractor fails to effect or keep in force any of the
insurances required under this Contract, Purchaser may effect and
keep in force any such insurances and pay such premiums as may be
necessary for that purpose and from time to time deduct the
amount so paid by Purchaser from any money due or which may
become due to the Contractor hereunder or recover the same as a
debt due from the Contractor, provided that Purchaser is not in
Default.
7. Each Party shall give the other prompt notification of any claim
with respect to any of the insurances to be provided hereunder,
accompanied by full details giving rise to such claim. Each Party
shall afford the other all such assistance as may be required for
the preparation and negotiation of insurance claims.
8. Contractor shall report to Purchaser as soon as practicable all
accidents or occurrences resulting in injuries to Contractor's
employees or third parties, or damage to property of third
parties, arising out of our during the course of services for
Purchaser by Contractor.
C. The Contractor may organize such levels of deductibles, excesses and
self-insurance as it considers appropriate.
D. The insurance requirements of this Article 27 will remain in place
with respect to each Segment, the System or System Upgrade, as the case may be,
and will not in any way be diminished or reduced until the transfer of title and
risk of loss shall have passed to Purchaser of such Segment, System or System
Upgrade, as the case may be, even in the event of the sale of substantially all
the assets of the Contractor by way of a merger, consolidation or sale of
assets.
ARTICLE 28 PLANT AND WORK RULES
--------------------------------
Employees and agents of each Party shall, while on the premises of the
other or its subcontractors, comply with all plant rules and governmental
regulations.
ARTICLE 29 RIGHT OF ACCESS
---------------------------
A. The Contractor shall, upon reasonable notice of not less than ten (10)
working days, during normal business hours and in a manner to avoid any
disruption of the work on the premises including performance of other contracts,
permit access by the Purchaser or its Quality Assurance (QA) Representative
(other than a competitor of the Contractor or any affiliate of a competitor) to
the Contractor's premises where the work will be performed, and will use its
best endeavors to secure rights of access to premises of its subcontractors
where the work will be performed, having subcontracts or orders in the amount
of, or equivalent to
52
U.S. $125,000 or more, in accordance with the Contractor's contractual
arrangements with its subcontractors, and allow the Purchaser or its QA
Representative to:
1. audit the Contractor's quality assurance system and its
application to the Work and Upgrade Work, including manufacture,
development and raw materials and components provision;
2. inspect all parts of the Work and Upgrade Work to the extent
reasonably practicable to ensure that their quality meets the
Specification.
This right of access shall allow for the Purchaser and/or its QA representative
(up to a total of three (3) persons). The Purchaser shall provide the name(s),
nationality and title of each such visitor prior to the visit. The Contractor
shall not be responsible for any costs, including travel and accommodation
costs, of the Purchaser or its representatives.
B. The right of access shall also allow for the Purchaser and/or
representatives (up to a total of three (3) persons) to be aboard the vessel(s)
during installation and the route survey, provided accommodations are available.
The Contractor shall not be responsible for any costs of the Purchaser or its
representatives, except for living expenses on board the vessel which includes
one (1 ) daily telex or fax, all other travel and accommodation costs for the
Purchaser or its QA Representatives shall be for the account of the Purchaser.
C. Any right of access shall not be construed as creating any obligation
requiring the Contractor or its subcontractors to disclose trade secrets or
proprietary information. Further, such right of access may be conditioned on the
execution of a confidentiality and non-disclosure agreement and/or subject to
routine building or security rules, regulations or procedures.
D. Any exercise of any right of the Purchaser hereunder to inspect,
audit, visit or to serve any part of the Work or System Upgrades shall not be
construed as limiting any obligation of Contractor hereunder, including without
limitation, under Articles 1 and 10 hereof.
E. Contractor will have access to the System as necessary to accomplish
its responsibilities under this Contract and in order to make repairs and to
make System Upgrades. Contractor will provide reasonable notice of its need for
access and will take reasonable steps to minimize disruptions to the operation
of the System.
F. Contractor shall give the Purchaser reasonable prior written notice of
each monthly project management review meeting with respect to the status of the
construction and/or installation of the System, and Purchaser's representatives
(up to three such representatives) and the Independent Engineer shall at their
cost be permitted to attend and participate in such meetings.
53
ARTICLE 30 QUALITY ASSURANCE
-----------------------------
All equipment, material and supplies provided under this Contract
shall be inspected and tested by representatives designated by the Contractor to
the extent reasonably practical to assure that the quality of the equipment,
materials and supplies being incorporated is sufficient to realize the System
Performance Requirements. The inspection and test program established for such
equipment, materials and supplies shall be consistent with commercial practices
normally employed by the Contractor in the construction of submarine cable
systems. The foregoing shall not be construed as limiting any of the
Contractor's obligations under this Contract.
ARTICLE 31 DOCUMENTATION
-------------------------
The Contractor shall furnish to the Purchaser one copy of the
standard documentation in the English language for the System provided
hereunder. Such documentation shall be provided prior to the Acceptance testing.
Additional copies of the documentation are available at additional cost.
ARTICLE 32 TRAINING
--------------------
The Contractor will provide, until the Date of Final Acceptance, any
and all training necessary for the operation and maintenance of the System.
ARTICLE 33 SETTLEMENT OF DISPUTES/ARBITRATION
----------------------------------------------
A. The Parties shall endeavor to settle amicably by mutual discussions
any disputes, differences, or claims whatsoever related to this Contract.
B. Failing such amicable settlement, any controversy, claim or dispute
arising under or relating to this Contract, including the existence, validity,
interpretation, performance, termination or breach thereof, shall finally be
settled by arbitration in accordance with the International Arbitration Rules of
the American Arbitration Association ("AAA"). Unless the Parties agree to a sole
arbitrator, there shall be three (3) arbitrators, with each Party appointing one
arbitrator, who collectively will select a third. The language of the
arbitration shall be English. The Arbitrator will not have authority to award
punitive damages to either Party. Each Party shall bear its own expenses, but
the Parties shall share equally the fees and expenses of the Arbitration
Tribunal and the AAA. This Contract shall be enforceable, and any arbitration
award shall be final, and judgment thereon may be entered in any court of
competent jurisdiction. In any such arbitration, the decision in any prior
arbitration under this Contract shall not be deemed conclusive of the rights as
among themselves of the Parties hereunder. The arbitration shall be held in New
York, New York. U.S.A.
54
ARTICLE 34 APPLICABLE LAW
--------------------------
This Contract shall be construed and governed in accordance with the
laws of the State of New York, United States, excluding its conflicts of law
provisions and excluding the Convention for the International Sale of Goods.
ARTICLE 35 NOTICES
-------------------
A. Any notices, consent, approval, or other communication pursuant to
this Contract shall be in writing, in the English language, and shall be deemed
to be duly given or served on a Party if sent to the Party at the address
stipulated in Sub-Article 35(B) and if sent by any one of the following means
only:
1. Sent by hand: Such communication shall be deemed to have been
received on the day of delivery provided receipt of delivery is
obtained.
2. Sent by facsimile: Such communication shall be deemed to have
been received, under normal service conditions, twenty-four
(24) hours following the time of dispatch or on confirmation by
the receiving Party, whichever is earlier.
3. Sent by registered or certified mail: Such communication shall
be deemed to have been received, under normal service
conditions, on the day it was received or on the tenth day
after it was dispatched, whichever is earlier.
B. For purposes of this Article, the names, addresses and fax numbers
of the Parties are as detailed below. Any change to the name, address, and
facsimile numbers may be made at any time by giving thirty (30) days prior
written notice.
AT&T Submarine Systems, Inc.
Room S120
▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇.▇.
FAX: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Global Telesystems Ltd.
▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
FAX ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇
55
ARTICLE 36 PUBLICITY AND CONFIDENTIALITY
-----------------------------------------
A. No information relating to this Contract shall be released by either
Party to any newspaper, magazine, journal or other written, oral or visual
medium without the prior written approval of an authorized representative of the
other Party; provided that, subject to Article 20 (Safeguarding of Information
--------
and Technology) and the following Sub-Article, this Article shall not restrict
either Party from (i) responding to customary press inquiries or otherwise
making public or private statements in the normal course of business, so long as
consistent with a mutually agreed press-release and (ii) assisting in the
obtaining of financing in accordance with Sub-Article 37(C), including the
publication of a financial tombstone.
B. This Contract and any non-public information, written or oral, with
respect to this Contract, "Confidential Information", will be kept confidential
and shall not be disclosed, in whole or in part, to any person other than
affiliates, officers, directors, employees, agents or representatives of a Party
(collectively, "Representatives") who need to know such Confidential Information
for the purpose of negotiating and executing this Contract. Each Party agrees to
inform each of its Representatives of the non-public nature of the Confidential
Information and to direct such persons to treat such Confidential Information in
accordance with the terms of this Article. Nothing herein shall prevent a Party
from disclosing Confidential Information (a) upon the order of any court or
administrative agency, (b) upon the request or demand of, or pursuant to any
regulation of, any regulatory agency or authority, (c) to the extent reasonably
required in connection with the exercise of any remedy hereunder, (d) to a
Party's legal counsel or independent auditors, (e) prospective lenders to the
Purchaser or Holding Company, and (f) to any actual or proposed assignee of all
or part of its rights hereunder provided that such actual or proposed assignee
agrees in writing to be bound by the provisions of this Article.
ARTICLE 37 ASSIGNMENT
-----------------------
A. Except as provided in this Article, neither Party shall assign this
Contract or any right or interest under this Contract, nor delegate any work or
obligation to be performed under this Contract ("Assignment"), without the other
Party's prior written consent which shall not be unreasonably withheld (it being
understood that it shall be deemed to be reasonable to withhold consent to the
assignment of this Contract or any rights, interest or obligations hereunder to
a competitor of Contractor or an affiliate of a competitor or uncreditworthy
party). Nothing herein shall preclude a Party from employing a subcontractor in
carrying out its obligations under this Contract. A Party's use of such
subcontractor shall not release the Party from its obligations or liability
under this Contract.
B. The Contractor has the right to assign all of its rights under this
Contract or to delegate all of its duties hereunder at any time without the
Purchaser's consent to any successor to substantially all the assets of the
Contractor by way of a merger, consolidation or sale of assets provided that in
the case of any assignment or delegation pursuant to this Sub-Article 37(B) such
assignee shall assume in writing all warranties, representations and obligations
of Contractor under this Contract. The Contractor shall give the Purchaser
written notice of the assignment.
56
C. The Parties acknowledge that Purchaser may finance construction of
the System on a Project finance" basis and that in connection therewith the
financing parties will require that such financing be secured by certain assets
of Purchaser (including but not limited to this Contract). The Purchaser may, in
connection with any such project financing grant a collateral assignment of its
rights and obligation under this Contract to any such financing parties which
executes and delivers a Consent, and in connection therewith, the Contractor
will execute and deliver a Consent, and Purchaser may transfer in accordance
with such Consent.
D. The Purchaser has the right to assign all of its rights and delegate
all of its duties under this Contract to any other entity (a Transferee") to
whom all of the Financing Documents and all Permits in Purchaser's name have
been assigned in accordance with the terms thereof and to whom all of
Purchaser's rights and interests in the System have been transferred. Purchaser
also has the right (i) to assign all of its rights hereunder with respect to any
particular Landing, Assets to any Transferee, (ii) to assign Permits with
respect to such Landing Assets, or have Permits with respect to such Landing
Assets issued in the name of, such Transferee and (iii) to transfer such Landing
Assets or have such Landing Assets transferred directly to, such Transferee;
provided that (a) such Transferee shall execute a supplement to this Contract
--------
whereby it becomes jointly and severally liable, together with Purchaser, for
all of Purchaser's obligations under this Contract and (b) Purchaser's and
Holding Company's lenders permit such assignments and transfers without causing
a reduction in the financing committed for the System. "Landing Assets" means,
with respect to each jurisdiction where a portion of the System is located, all
or part of such portion of the System located therein. It is understood that the
Purchaser, at its option, may assign and transfer rights with respect to Landing
Assets in different jurisdiction to different Transferees. Purchaser shall not
transfer any of its rights under this Contract or the System except in
accordance with the foregoing. Any assignment or transfer not expressly
permitted by this Sub-Article 37(D) shall be of no force and effect. Any
assignment or transfer which results in any increase in costs or any loss,
damage, delay or failure of performance shall constitute a Force Majeure, and,
without limiting the applicability of Article 17 (Force Majeure), Purchaser
shall be responsible for any increase in costs resulting therefrom.
ARTICLE 38 RELATIONSHIP OF THE PARTIES
---------------------------------------
All work performed by a Party under this Contract shall be performed
as an independent contractor and not as an agent of the other and no persons
furnished by a Party shall be considered the employees or agents of the other.
Each Party shall be responsible for its employees' compliance with all Laws
while performing under this Contract. This Contract shall not form a joint
venture or partnership between the Parties.
ARTICLE 39 SUCCESSORS BOUND
----------------------------
This Contract shall be binding on the Contractor and the Purchaser
and their respective successors and assigns.
57
ARTICLE 40 ARTICLE CAPTIONS
----------------------------
The captions of the Articles do not form part of this Contract and
shall not have any effect on the interpretation thereof.
ARTICLE 41 SEVERABILITY
------------------------
If any of the provisions of this Contract shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable the entire Contract, but rather the entire Contract shall
be construed as if not containing the particular invalid or unenforceable
provision or provisions and the rights and obligations of the Contractor and the
Purchaser shall be construed and enforced accordingly. In the event such invalid
or unenforceable provision is an essential and material element of this
Contract, the Parties shall promptly negotiate a replacement provision.
ARTICLE 42 SURVIVAL OF OBLIGATIONS
-----------------------------------
The Parties' rights and obligations, which, by their nature would
continue beyond the termination, cancellation or expiration of this Contract,
including, but not limited to, those contained in Sub-Article 4(B) (Taxes,
Levies and Duties) and Sub-Article 4(C) (Withholding Tax), Article 18
(Intellectual Property), Article 20 (Safeguarding of Information and
Technology), Article 21 (Export Control) and Article 23 (Limitation of
Liability/Indemnification) shall survive termination, cancellation or expiration
hereof. Article 10 (Warranty) and Article 11 (Contractor Support), shall survive
termination, cancellation or expiration hereof, if and only if, this Contract is
terminated by Purchaser pursuant to Sub-Article 13(A).
ARTICLE 43 NON-WAIVER
----------------------
A waiver of any of the terms and conditions of this Contract, or the
failure of either Party strictly to enforce any such term or condition, on one
or more occasions shall not be construed as a waiver of the same or of any other
term or condition of this Contract on any other occasion.
ARTICLE 44 LANGUAGE
--------------------
This Contract has been executed in the English language and English
will be the controlling language for interpretation of this Contract.
ARTICLE 45 ENTIRE AGREEMENT
----------------------------
This Contract supersedes all prior oral or written understanding
between the Parties and constitutes the entire agreement with respect to the
subject matter herein. Such terms and conditions shall not be modified or
amended except by a writing signed by authorized representatives of all Parties.
58
ARTICLE 46 COMING INTO FORCE
-----------------------------
A. This Contract agreed to between the Purchaser and Contractor will
not enter into force unless
(I) each of the following documents is executed and delivered on or before March
25, 1997, in a form and substance satisfactory, in its sole discretion, to each
Party hereto:
1. Operations, Administration and Maintenance Agreement;
2. Sales Agency Agreement;
3. Escrow and Security Agreement;
4. CIBC Commitment Letter;
5. Holding Company Note Purchase Agreement; and
6. Guaranty;
(II) the form of the following have been agreed to: (i) Retainage Lender of
Credit, (ii) Appendix 4-1 (Invoice Certificate), (iii) Consent and (iv) Capacity
Purchase Agreement; and
(III) Purchaser shall have made the payments described in Sub-Article 5(C)(2).
B. When all the conditions indicated in Sub-Article 46(A) above are
complied with, then the Purchaser shall immediately notify the Contractor, and,
so long as the date of such notice is on or before March 25, 1997, the Contract
shall come into force on the date of such notice.
59
This Contract is executed in Toronto, Canada by duly authorized
representatives of the Parties as set forth below.
AT&T Submarine Systems, Inc. Global Telesystems Ltd.
By:____________________ By:____________________
Signature Signature
Title:_________________ Title:_________________
Date:__________________ Date:__________________
EXHIBIT 10.2 (CONTINUED)
SUPPLEMENT ▇▇. ▇
▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇, dated as of June 27, 1997 (this "Supplement"), to
----------
the Project Development and Construction Contract described below, among AT&T
Submarine Systems, Inc. (the "Contractor"), Global Telesystems Ltd. ("GTL"), GT
---------- ---
Landing Corp., a Delaware corporation (the "U.S. Subsidiary"), SSI Atlantic
---------------
Crossing LLC, a Delaware limited liability company (the "SSI Subsidiary"), GT
--------------
U.K. Ltd., a corporation organized under the laws of England (the "U.K.
----
Subsidiary") and Global Telesystems GmbH, a corporation organized under the laws
----------
of Germany (the "German Subsidiary"; together with the U.S. Subsidiary, the SSI
-----------------
Subsidiary and the U.K. Subsidiary, the "Assignees").
---------
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, unless otherwise defined herein, capitalized terms used
herein shall have the meanings given to them in the Contract;
WHEREAS, the Contractor and GTL have entered into the Project
Development and Construction Contract, dated March 18, 1997 (as the same may
from time to time be amended, modified or supplemented, the "Contract"),
--------
pursuant to which the Contractor has agreed to design, manufacture, construct,
install and deliver a fiber optic cable system connecting (a) the United States
to the United Kingdom, (b) the United Kingdom to Germany and (c) Germany to the
United States, all as more fully described in the Contract;
WHEREAS, the Contractor and GTL have also entered into the Operations,
Administration and Maintenance Agreement, dated as of March 25, 1997, pursuant
to which the Contractor has agreed, in accordance with the terms thereof, to
operate, administer and maintain the System;
WHEREAS, the Contractor and GTL have also entered into the Sales
Agency Agreement, dated as of March 25, 1997;
WHEREAS, the U.S. Subsidiary, the U.K. Subsidiary, and the German
Subsidiary are wholly-owned subsidiaries of GTL, and were formed for the purpose
of owning and providing capacity on certain Landing Assets and Rights;
WHEREAS, the SSI Subsidiary is a wholly-owned subsidiary of SSI
Atlantic Crossing Holdings LLC, a Delaware limited liability company (the "SSI
---
Holdings Subsidiary"), which in turn is a wholly-owned subsidiary of the
-------------------
Contractor, and was formed for the purpose of owning or leasing and controlling
the U.S. Landing Assets and Rights;
WHEREAS, GTL wishes to transfer all rights under the Contract (i) with
respect to the U.S. Real Property Landing Assets and Rights to the U.S.
Subsidiary, (ii) with respect to the U.S. Personal Property Landing Assets and
Rights to the SSI Subsidiary, (iii) with respect to the U.K. Landing Assets and
Rights to the U.K. Subsidiary and (iv) with respect to the German Landing Assets
and Rights to the German Subsidiary;
WHEREAS, GTL, the Contractor and Deutsche Telekom AG have entered into
a Memorandum of Understanding, dated April 21, 1997, relating to the German
Landing Assets and Rights (the "DT-MOU");
------
WHEREAS, the U.S. Subsidiary will lease the U.S. Real Property Landing
Assets and Rights to the SSI Subsidiary so that the SSI Subsidiary will have
control over all U.S. Landing Assets and Rights;
WHEREAS, the SSI Subsidiary will grant an indefeasible right of use to
the U.S. Subsidiary with respect to the U.S. Landing Assets and Rights;
WHEREAS, GTL will own and control all of the System other than the
Landing Assets and Rights;
WHEREAS, Sub-Article 37(D) of the Contract contemplates the assignment
by GTL to a Transferee or Transferees of its rights under the Contract with
respect to any particular Landing Assets;
WHEREAS, Sub-Article 37(D) of the Contract requires that, in
connection with such assignment by GTL, the Transferees, GTL and the Contractor
shall execute a supplement to the Contract describing their respective rights
and obligations; and
WHEREAS, the Contractor, GTL, the U.S. Subsidiary, the SSI Subsidiary,
the U.K. Subsidiary and the German Subsidiary wish to supplement the provisions
of the Contract to reflect their agreement with respect to the Landing Assets;
NOW THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
1. Defined Terms. (a) Unless otherwise defined herein, capitalized
-------------
terms which are defined in the Contract are used herein as therein defined.
(b) The Contract is hereby amended by deleting the definition of
"Landing Assets" appearing in the third sentence of Sub-Article 37(D) of the
--------------
Contract, and by inserting a new definition of "Landing Assets" in Article 3 of
--------------
the Contract as follows:
"'Landing Assets' means, with respect to each Landing Country where a
--------------
portion of the System is located, all real and personal property (including
leasehold interests therein) comprising the System from time to time and
located within the territory of such Country, including both the portions
of such property on the land of such Country and the portion of such
property under the territorial waters of such Country, and the portion of
such underwater property extending to a point one-half mile beyond the
territorial limit of such Country."
3
(c) Article 3 of the Contract is hereby amended to add the following
definitions:
"Contingency Letter of Credit" shall mean the letter of credit
----------------------------
described in Sub-Article 5(C)(7) hereof.
"Credit Agreement" means the Credit Agreement, dated as of the date
----------------
hereof, among GTL, the financial institutions from time to time parties
thereto as lenders, Deutsche Bank AG, New York Branch and Canadian Imperial
Bank of Commerce, as lead agents, Deutsche Bank AG, New York Branch, as
administrative agent, and Canadian Imperial Bank of Commerce, as
syndication agent, documentation agent and issuing bank.
"DT-MOU" has the meaning given such term in Supplement No. 1.
------
"German Landing Assets and Rights" means Landing Assets and Rights
--------------------------------
located in Germany, including without limitation, the real and personal
property to be listed on Schedule 3 to Supplement No. 1.
"German Landing Assets and Rights Price" has the meaning set forth in
--------------------------------------
Section 4(d) of Supplement No. 1.
"GTL" shall mean Global Telesystems Ltd., a corporation organized and
---
existing under the laws of Bermuda.
"IRU and Option Agreement" means an Indefeasible Right of Use and
------------------------
Option Agreement to be entered into between the SSI Subsidiary and the U.S.
Subsidiary in substantially the form of Exhibit A to Supplement No. 1, as
the same may from time to time be amended, modified or supplemented.
"IRU Price" has the meaning given such term in Section 6 of Supplement
---------
No. 1.
"Landing Assets and Rights" means, with respect to each Landing
-------------------------
Country, the Landing Assets in such Landing Country together with all
Permits necessary to own or lease, operate and maintain such Landing Assets
and all rights or licenses under Articles 18, 19, 20 of the Contract
relating to such Landing Assets, including all Deliverable Software and
Deliverable Technical Material relating to such Landing Assets.
"Landing Countries" means the United States of America, the United
------------------
Kingdom and Germany.
"Lender Pledge Agreement" means the Pledge Agreement, dated as of the
-----------------------
date hereof, made by the SSI Holdings Subsidiary in favor of the
Administrative Agent for
4
the lenders under the Credit Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"SSI Subsidiary" has the meaning given such term in Supplement No. 1.
--------------
"Subordinated Pledge Agreement" means the Subordinated Pledge
-----------------------------
Agreement, dated as of the date hereof, made by the SSI Holdings Subsidiary
in favor of the U.S. Subsidiary.
"Supplement No. 1" means Supplement No. 1, dated as of June 27, 1997,
----------------
to the Contract, among GTL, the Contractor, the U.S. Subsidiary, the UK
Subsidiary, the German Subsidiary and the SSI Subsidiary.
"U.K. Landing Assets and Rights" means all Landing Assets and Rights
------------------------------
located in the United Kingdom, including without limitation, the property
to be listed on Schedule 2 to Supplement No. 1.
"U.K. Landing Assets and Rights Price" has the meaning given such
------------------------------------
term in Section 4(c) of Supplement No. 1 .
"U.K. Subsidiary" has the meaning given such term in Supplement No. 1.
---------------
"U.S. Landing Assets and Rights" means all Landing Assets and Rights
------------------------------
in the United States, including, without limitation, the property to be
listed on Schedule 1 to Supplement No. 1.
"U.S. Personal Property Landing Assets and Rights" means all the U.S.
------------------------------------------------
Landing Assets and Rights other than the U.S. Real Property Landing Assets
and Rights.
"U.S. Personal Property Landing Assets and Rights Price" has the
------------------------------------------------------
meaning given such term in Section 4(b) of Supplement No. 1.
"U.S. Real Property Landing Assets and Rights" means all U.S. Landing
--------------------------------------------
Assets and Rights that consists of real property, including, without
limitation, the property to be set forth on Part 2 of Schedule 1 to
Supplement No. 1.
"U.S. Real Property Landing Assets and Rights Price" has the meaning
--------------------------------------------------
given such term in Section 4(a) of Supplement No. 1.
"U.S. Subsidiary" has the meaning given such term in Supplement No. 1.
---------------
2. Assignments of Rights. (a) GTL hereby assigns and transfers all
----------------------
of its right, title and interest under the Contract with respect to the U.S.
Real Property Landing Assets and Rights to the U.S. Subsidiary and the U.S.
Subsidiary hereby accepts such
5
assignment and transfer and assumes all of the obligations and liabilities of
Purchaser under the Contract with respect to the U.S. Real Property Landing
Assets and Rights;
(b) GTL hereby assigns and transfers all of its right, title and
interest under the Contract with respect to the U.K. Landing Assets and Rights
to the U.K. Subsidiary and the U.K. Subsidiary hereby accepts such assignment
and transfer and assumes all of the obligations and liabilities of Purchaser
under the Contract with respect to the U.K. Landing Assets and Rights.
(c) GTL hereby assigns and transfers all of its right, title and
interest under the Contract with respect to the German Landing Assets and Rights
to the German Subsidiary and the German Subsidiary hereby accepts such
assignment and transfer and assumes all of the obligations and liabilities of
Purchaser under the Contract with respect to the German Landing Assets and
Rights.
(d) GTL hereby assigns and transfers all of its right, title and
interest under the Contract with respect to the U.S. Personal Property Landing
Assets and Rights to the SSI Subsidiary and the SSI Subsidiary hereby accepts
such assignment and transfer and assumes all of the obligations and liabilities
of Purchaser under the Contract with respect to the U.S. Personal Property
Landing Assets and Rights.
(e) The Contractor hereby acknowledges, consents and agrees to the
assignments and assumptions referred to in paragraphs (a) through (d) of this
Section 2.
(f) For purposes of determining the submerged Landing Assets subject
to the foregoing transfer, it is assumed that under the current law of each
Landing Country, the territorial waters of such Country extend twelve nautical
miles seaward from the coast of such Country. If such assumption shall prove to
be incorrect, or if a law shall change such assumption and in fact the
territorial waters of any country extend beyond twelve nautical miles, the
parties shall adjust the Landing Assets subject to this Agreement.
(g) Without limiting the generality of the foregoing, the U.S.
Subsidiary, the SSI Subsidiary, the U.K. Subsidiary and the German Subsidiary
each acknowledges and agrees that it will be subject to the same restrictions on
the transfer of its Landing Assets and Rights as GTL under Sub-Article 37(D) of
the Contract, Sub-Article 25(D) of the OA&M Agreement and Sub-Article 18(D) of
the Sales Agency Agreement (the "Transfer Restrictions") and further agrees that
---------------------
it will cause each direct or indirect transferee of any of its Landing Assets
and Rights to acknowledge and agree that such transferee is also subject to the
Transfer Restrictions.
(h) GTL represents and warrants that the U.S. Subsidiary, the U.K.
Subsidiary and the German Subsidiary are each direct, wholly-owned subsidiaries
and acknowledges and agrees that any transfer of any interest in the U.S.
Subsidiary, the U.K. Subsidiary or the German Subsidiary (or any other person or
entity with any Landing Assets and Rights) will be subject to the Transfer
Restrictions to the same extent as a transfer of Landing Assets and further
agrees that it will cause each direct or indirect transferee of any
6
such interest to acknowledge and agree that such transferee is also subject to
the Transfer Restrictions with respect to such interest.
3. Joint and Several Liability. (a) Notwithstanding the
---------------------------
assignments and assumptions set forth in Section 2 above, GTL shall remain
liable to pay and perform all of the obligations and liabilities under the
Contract with respect to the assigned Landing Assets and Rights, including,
without limitation, the payment obligations under Section 4 hereof.
(b) The U.S. Subsidiary and the U.K. Subsidiary shall be jointly and
severally liable, together with GTL, for all of GTL's obligations under the
Contract, including, without limitation, GTL's obligations under paragraph (a)
above.
(c) The German Subsidiary shall be jointly and severally liable,
together with GTL, for all obligations of Purchaser under the Contract with
respect to the German Landing Assets and Rights, but for no other obligations
under the Contract.
(d) GTL and the U.K. Subsidiary shall be jointly and severally liable
with the U.S. Subsidiary to pay the IRU Price.
(e) Notwithstanding anything to the contrary herein or in the
Contract, from and after the date of effectiveness of the IRU and Option
Agreement until the date of termination thereof, so long as the IRU Price is
paid to the SSI Subsidiary (i) none of GTL, the U.S. Subsidiary or the U.K.
Subsidiary shall be liable to pay the U.S. Personal Property Landing Assets and
Rights Price and (ii) the failure of the SSI Subsidiary to perform its
obligations under Section 4(b) shall not in and of itself constitute a payment
default or otherwise excuse the Contractor from performing all of its
obligations with respect to the U.S. Personal Property Landing Assets and
Rights, unless such failure is directly caused by an intentional action by the
U.S. Subsidiary or any of its assignees or transferees (including the
Administrative Agent and the lenders under the Credit Agreement).
4. Amounts Payable under the Contract. (a) The U.S. Subsidiary
----------------------------------
hereby agrees to pay all amounts payable under the Contract, when and as due
thereunder, with respect to the U.S. Real Property Landing Assets and Rights
(the "U.S. Real Property Landing Assets and Rights Price"). The portion of the
--------------------------------------------------
Initial Contract Price with respect to the U.S. Real Property Landing Assets and
Rights is to be set forth on Part 1 of Schedule 1 and is subject to adjustment
as provided in Section 4(e) hereof.
(b) The SSI Subsidiary hereby agrees to pay, if and only if the IRU
Price is received by it when and as due under Section 6 hereof, all amounts
payable under the Contract, when and as due thereunder, with respect to the U.S.
Personal Property Landing Assets and Rights (the "U.S. Personal Property Landing
------------------------------
Assets and Rights Price"). The portion of the Initial Contract Price with
-----------------------
respect to the U.S. Personal Property Landing Assets and Rights is to be set
forth on Part 2 of Schedule 1 hereto and is subject to adjustment as provided in
Section 4(e) hereof.
7
(c) The U.K. Subsidiary agrees to pay all amounts payable under the
Contract, when and as due thereunder, with respect to the U.K. Landing Assets
and Rights (the "U.K. Landing Assets and Rights Price"). The portion of the
------------------------------------
Initial Contract Price with respect to the U.K. Landing Assets and Rights is to
be set forth on Schedule 2 and is subject to adjustment as provided in Section
4(e) hereof .
(d) The German Subsidiary hereby agrees to pay all amounts payable
under the Contract, when and as due thereunder, with respect to the German
Landing Assets and Rights (the "German Landing Assets and Rights Price"). The
--------------------------------------
portion of the Initial Contract Price with respect to the German Landing Assets
and Rights is to be set forth on Schedule 3 hereto and is subject to adjustment
as provided in Section 4(e) hereof.
(e) The amounts set forth in Schedules 1, 2 and 3 represent the
portions of the Initial Contract Price attributable to the respective Landing
Assets and Rights, are not in addition to the Initial Contract Price, and are
subject to adjustments and additions pursuant to the Contract to the same extent
as the Initial Contract Price.
(f) The Contractor will send separate invoices to the appropriate
Transferee for payment for Landing Assets.
(g) All amounts received by the SSI Subsidiary from the Contractor
under the Contract shall be promptly turned over to the U.S. Subsidiary.
5. Delivery of Landing Assets. Notwithstanding anything in the
--------------------------
Contract to the contrary, the Contractor hereby agrees to deliver, transfer and
assign, or cause to be delivered, transferred and assigned (i) all right, title
and interest in the U.S. Real Property Landing Assets and Rights to the U.S.
Subsidiary, (b) all right, title and interest in the U.S. Personal Property
Landing Assets and Rights to the SSI Subsidiary, (c) all right, title and
interest in the U.K. Landing Assets and Rights to the U.K. Subsidiary and (d)
all right, title and interest in the German Landing Assets and Rights to the
German Subsidiary.
6. IRU and Option Agreement. The SSI Subsidiary and the U.S.
------------------------
Subsidiary agree to enter into the IRU and Option Agreement as soon as
practicable. As the price for the indefeasible right of use granted by the SSI
Subsidiary (the "IRU Price"), the U.S. Subsidiary shall pay to the SSI
---------
Subsidiary an amount equal to the U.S. Personal Property Landing Assets and
Rights Price, which Price shall be payable at the same time or times as the U.S.
Personal Property Landing Assets and Rights Price is due and payable. The
Contractor, the SSI Subsidiary and the U.S. Subsidiary agree, for United States
federal, state and local income tax purposes, (a) to treat the U.S. Subsidiary
as the owner of the U.S. Personal Property Landing Assets and Rights as of the
date or dates the Contractor transfers title to the SSI Subsidiary and (b) to
treat payments of the IRU Price by the U.S. Subsidiary as payments to the
Contractor in respect of such assets and rights, unless such treatment is
challenged by a taxing authority (subject to the contest provisions of the
Indemnity Agreement of even date herewith) or, in respect of such treatment by
the Contractor or the SSI Subsidiary, ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ or other independent
tax counsel selected by the
8
Contractor and reasonably satisfactory to GTL provides an opinion that such
treatment is more likely than not the incorrect tax treatment of the IRU Price.
7. Lease. The U.S. Subsidiary hereby agrees to lease the U.S. Real
-----
Property Landing Assets and Rights to the SSI Subsidiary pursuant to a Site
Lease substantially in the form of Exhibit B hereto. The SSI Subsidiary and the
U.S. Subsidiary agree to enter into the Site Lease as soon as practicable.
8. Arrangement with Deutsche Telekom AG. The parties hereto hereby
------------------------------------
acknowledge and agree that nothing contained in the DT-MOU or in any subcontract
between Contractor and Deutsche Telekom AG shall change, limit or otherwise
alter the respective obligations and rights of the Contractor, on the one hand,
and GTL and its Transferees, on the other hand, under the Contract, and the
Contractor remains primarily liable and obligated to pay and perform all of its
obligations under the Contract, (including, without limitation, those
obligations under the Contract).
9. Use of the Term "Purchaser" and "Party" in the Supply Contract.
--------------------------------------------------------------
(a) The parties hereto agree that the term "Purchaser" shall mean GTL or any of
its direct or indirect assignees or transferees (including the assignees or
transferees hereunder) in:
(i) the definitions of "Excluded Tax", "Nexus Tax", "Permits" and
"Work";
(ii) Sub-Article 6A(K);
(iii) the second line of Sub-Article 7(A);
(iv) the eighth line of Sub-Article 10(A)(1)(c);
(v) Sub-Article 10(A)(1)(c)(ii), Sub-Articles 10(A)(2), 10(A)(3),
10(A)(4), 10(A)(5) and 10(C);
(vi) the first line of Sub-Article 12(B) and the first sentence of
Sub-Article 12(C);
(vii) Sub-Article 13(C)(3);
(viii) Sub-Article 15(B)(i);
(ix) Sub-Articles 17(A), 17(B) and 17(C);
(x) Sub-Article 18(A), the second sentence of Sub-Article 18(C), Sub-
Article 18(C)(3), Sub-Article 18(C)(4), the penultimate line of
Sub-Article 18(D), the last sentence of Sub-Article 18(E) and
Sub-Article 18(F);
(xi) Sub-Articles 19(A)(1), 19(A)(2) and 19(E);
9
(xii) Sub-Article 23(D) (excluding the first occurrence);
(xiii) Sub-Article 25(C) (excluding the first occurrence); and
(xiv) Sub-Article 27(A)(5), 27(B)(6) and 27(D);
in each case, in the Contract.
(b) The parties hereto agree that the term "Party" or "Parties" shall
mean GTL or any of its direct or indirect assignees or transferees (including
the assignees and transferees hereunder) on the one hand and the Contractor on
the other in:
(i) Sub-Articles 13(A)(2), 13(A)(3) and 13(A)(4) (but, so long as the
SSI Subsidiary is owned by SSI, not including, in the case of
clauses (3) and (4), the SSI Subsidiary, unless, in the case of
clause (4), such event with respect to the SSI Subsidiary was not
commenced by SSI);
(ii) Sub-Article 13(E);
(iii) Sub-Article 36(A); and
(iv) Sub-Article 37(A),
in each case in the Contract.
(c) GTL and its direct and indirect assignees and transferees shall
act collectively under the Contract and through GTL as its agent with respect to
Consents, Performance Requirements, Acceptance Testing, Contract Variations,
System Upgrades, termination and suspension of all or any part of the Contract
and acceptance of the System or any Segment (including, without limitation, the
issuance of Certificates of Commercial Service, Provisional Acceptance and Final
Acceptance), and any notices, certificates or requests by GTL with respect to
any of the foregoing shall be deemed to have been given by GTL and its direct
and indirect transferees and assignees and any notices, certificates or requests
by any other person with respect to the foregoing shall have no force or effect.
Without limiting the foregoing, the parties acknowledge and agree that no title
to any portion of a Segment or the System shall be transferred to GTL or any of
its assignees or transferees unless all requirements under the Contract for
transfer of the entire Segment or the System, as the case may be, have been
satisfied in full.
(d) GTL shall act as agent for its direct and indirect assignees and
transferees for the receipt of notices (excluding invoices), reports and
information (including the single copy of the documentation provided under
Article 31 of the Contract) from the Contractor, and notices, reports and
information delivered to GTL by the Contractor shall be deemed to have been
delivered to GTL and its direct and indirect transferees. GTL shall
10
furnish copies of all such notices, reports and information to the U.S.
Subsidiary, the U.K. Subsidiary and the German Subsidiary.
10. Insurance. The Contractor hereby agrees to amend its insurance
---------
policies maintained pursuant to Sub-Article 27(A) of the Contract to name each
Assignee as an additional insured, to the same extent as GTL is so named
pursuant to Sub-Article 27(B) of the Contract, as to operations under the
Contract with respect to the Landing Assets and Rights transferred to such
Assignee hereunder, in which event the Contractor's insurance shall be primary
to any insurance carried by such Assignee.
11. Schedules. (a) The U.S. Subsidiary, GTL and the Contractor agree
---------
to use their best efforts to complete Schedule 1 hereto as soon as is
practicable.
(b) The U.K. Subsidiary, GTL and the Contractor agree to use their
best efforts to complete Schedule 2 hereto as soon as is practicable.
(c) The German Subsidiary, GTL and the Contractor agree to use their
best efforts to complete Schedule 3 hereto as soon as is practicable.
12. Representation by GTL. GTL represents and warrants that GTL's
---------------------
and Holding Company's lenders will permit the foregoing assignments and
transfers without causing a reduction in the financing committed for the System.
13. Covenants of the Contractor. (a) The Contractor will not (i)
---------------------------
vote to enable, or take any other action to permit the SSI Holdings Subsidiary
to issue limited liability company interests or other ownership or equity
securities of any nature or to issue any other securities convertible into or
granting the right to purchase or exchange for any limited liability company
interests or other ownership or equity securities of any nature of the SSI
Holdings Subsidiary, (ii) sell, assign, transfer, exchange or otherwise dispose
of, or grant any option with respect to, the Contractor's right, title and
interest in the SSI Holdings Subsidiary or (iii) take any action which could
result in the Contractor's right, title and interest in the SSI Holdings
Subsidiary becoming subject to a lien, trust, pledge or security interest.
(b) The Contractor shall cause the SSI Holdings Subsidiary to not (i)
vote to enable, or take any other action to permit the SSI Subsidiary to issue
limited liability company interests or other ownership or equity securities of
any nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any limited liability company interests or
other ownership or equity securities of any nature of the SSI Subsidiary, (ii)
sell, assign, transfer, exchange or otherwise dispose of, or grant any option
with respect to, the SSI Holdings Subsidiary's right, title and interest in the
SSI Subsidiary or (iii) take any action which could result in the SSI Holdings
Subsidiary's right, title and interest in the SSI Subsidiary becoming subject to
a lien, trust, pledge or security interest, except for the security interests
created by the Lender Pledge Agreement and the Subordinated Pledge Agreement.
11
14. Acceptance of the System. Without limiting any of the
------------------------
Contractor's rights or any of GTL's obligations, the Contractor and GTL agree
that any Certificate of Provisional Acceptance, Certificate of Commercial
Service or Certificate of Final Acceptance under the Contract issued by GTL
shall be deemed not to have been issued unless GTL shall have received the prior
written consent of Deutsche Bank AG, New York Branch, as administrative agent
for the Lenders (as defined in the Credit Agreement). The Contractor further
acknowledges and agrees that none of the Lenders nor any Agent Related Person
(as defined in the Credit Agreement) shall have any liability under the Contract
if the Independent Engineer (as defined in the Credit Agreement) shall issue a
rejection (including as to a Segment) under the Contract.
15. Amendment to Sub-Article 13. Sub-Article 13(A) of the Contract
---------------------------
is hereby amended by deleting paragraph (2) therein in its entirety and
inserting in lieu thereof the following:
"If the other Party defaults on any of its payment
obligations (or, in the case of the Contractor, if the
amount in the Contingency Account or the amount
available to be drawn under the Contingency Letter of
Credit and the Retainage Letter of Credit is less than
the Required Amount, unless the period of time during
which the Retainage Letter of Credit has to be
outstanding has expired) and does not cure such default
(or does not increase the amount on deposit in the
Contingency Account or increase the amount available to
be drawn under the Contingency Letter of Credit and the
Retainage Letter of Credit to the Required Amount)
within a period of thirty (30) days (or such longer
period as the non-breaching party may authorize in
writing) after receipt of written notice demanding
cure;".
16. Contractor's Acknowledgments.
----------------------------
(a) The Contractor acknowledges and agrees that the Purchaser has
complied with Sub-Article 15(B)(iii) of the Contract, notwithstanding that it
complied later than the required date.
(b) Contractor has had the opportunity to review copies of the
Financing Documents listed on Exhibit C hereto (other than the Holding Company
Note Purchase Agreement and the Financing Documents relating solely thereto) and
the Contractor has no objection to the terms thereof.
(c) The Contractor acknowledges that the Purchaser has granted liens
and security interests on the Purchaser's right, title and interest in and to
the System in favor of its lenders pursuant to the Financing Documents and
agrees that such liens and security interests are assignments and transfers
permitted by and in accordance with Article 37 of the Contract.
12
17. Notices. Any notices, consent, approval, or other communication
-------
pursuant to this Supplement shall be in writing, in the English language, and
shall be effected in the manner provided for in Sub-Article 35(A) of the
Contract, and in the case of the U.S. Subsidiary, the SSI Subsidiary, the U.K.
Subsidiary and the German Subsidiary, at the address specified below its
signature hereto or to GTL as its agent for notices.
18. Parties. As between the Contractor, GTL and each Assignee that
-------
becomes a party hereto, this Supplement shall be treated as, and shall be
enforceable as, an agreement between the Contractor, GTL and such Assignee and
therefor it is not necessary for all Assignees to become parties hereto in order
for this Supplement to become valid and enforceable as between the Contractor,
GTL and each Assignee which does become a party hereto.
19. Governing Law. This Supplement shall be governed by, and
-------------
construed and interpreted in accordance with, the laws of the State of New York,
United States.
20. Netherlands. The parties agree that none of the foregoing shall
-----------
limit the Contractor's rights under Sub-Article 6(E) of the Contract.
21. Miscellaneous. Except as expressly amended or supplemented
-------------
herein, the Contract shall continue to be, and shall remain, in full force and
effect in accordance with its terms. This Supplement may be executed by the
parties in any number of separate counterparts (including by facsimile
transmission) and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the undersigned has caused this Supplement
to be duly executed and delivered in the location set forth below its signature
by its proper and duly authorized officer as of the date hereof.
AT&T SUBMARINE SYSTEMS, INC.
By: /s/ [SIGNATURE ILLEGIBLE]^^
---------------------------------
Title: President
Signed in:
GLOBAL TELESYSTEMS LTD.
By:_________________________________
Title:
Signed in:
GT LANDING CORP.
By:_________________________________
Title:
Signed in:
Address:
SSI ATLANTIC CROSSING LLC
By: /s/ [SIGNATURE ILLEGIBLE]^^
---------------------------------
Title: Treasurer
Signed in:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
IN WITNESS WHEREOF, each of the undersigned has caused this Supplement
to be duly executed and delivered in the location set forth below its signature
by its proper and duly authorized officer as of the date hereof.
AT&T SUBMARINE SYSTEMS, INC.
By:_________________________________
Title:
Signed in:
GLOBAL TELESYSTEMS LTD.
By: /s/ [SIGNATURE ILLEGIBLE]^^
---------------------------------
Title: President
Signed in:
GT LANDING CORP.
By:_________________________________
Title:
Signed in:
Address:
SSI ATLANTIC CROSSING LLC
By:_________________________________
Title:
Signed in:
Address:
IN WITNESS WHEREOF, each of the undersigned has caused this Supplement
to be duly executed and delivered in the location set forth below its signature
by its proper and duly authorized officer as of the date hereof.
AT&T SUBMARINE SYSTEMS, INC.
By:_________________________________
Title:
Signed in:
GLOBAL TELESYSTEMS LTD.
By:_________________________________
Title:
Signed in:
GT LANDING CORP.
By: /s/ [SIGNATURE ILLEGIBLE] ^^
---------------------------------
Title: President
Signed in:
Address: c/o Pacific Capital Group, Inc.
▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SSI ATLANTIC CROSSING LLC
By:_________________________________
Title:
Signed in:
Address:
GT U.K. LTD
By: /s/ [SIGNATURE ILLEGIBLE]
-------------------------------
Title: Director
Signed in:
Address: c/▇ ▇▇▇▇▇▇ & Co.
The Quadrangle,, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇) ▇▇▇▇ ▇▇▇▇▇▇
GLOBAL TELESYSTEMS GMBH
By: ________________________________
Title:
Signed in:
Address:
AFFIDAVIT OF EXECUTION BY CORPORATION
-------------------------------------
I, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, of the City of Windsor, in the County of Essex, Province
of Ontario, Canada, make oath and say:
1. I am the subscribing witness to the signature and I was present ???? it
executed at Windsor, Ontario, on the 27th day of June, 1997, ????? behalf
of GT U.K. Ltd. by ▇▇▇▇▇ ▇▇▇▇▇▇, Director.
2. I know the said ▇▇▇▇▇ ▇▇▇▇▇▇ and know him to be the Director of ???? said
Corporation.
SWORN before me at the City of )
Windsor, in the County of Essex, ) /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
this 27th day of June, 1997. ) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
/s/ [SIGNATURE ILLEGIBLE]
A Commissioner, etc.
ANNEX A
DEFINITIONS
"Affiliate": of any designated Person, each Person which, directly or
---------
indirectly, controls or is controlled by or is under common control with such
designated Person. For the purposes of this definition, "control" (including,
-------
with correlative meanings, the terms "controlled by" and "under common control
------------ --------------------
with"), as used with respect to any Person, shall mean the possession, directly
----
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities
or by contract or otherwise.
"Applicable Law" or "Law": with respect to any Governmental Authority,
-----------------------
any constitutional provision, law, statute, rule, regulation, ordinance, treaty,
order, decree, judgment, decision, certificate, holding, injunction,
Governmental Action or requirement of such Governmental Authority along with the
interpretation and administration thereof by any Governmental Authority charged
with the interpretation or administration thereof. Unless the context clearly
requires otherwise, the term "Applicable Law" or "Law" shall include each of the
foregoing (and each provision thereof) as in effect at the time in question,
including any amendments, supplements, replacements, or other modifications,
thereto or thereof, and whether or not in effect as of the date hereof.
"Business Day": a day other than a Saturday, a Sunday or any other
------------
day on which commercial banks in New York City, are required or authorized by
Law to be closed and which is also a day on which dealings in Dollar deposits
are carried out in the London interbank market.
"Credit Agreement" shall mean the Credit Agreement, dated as of June
----------------
27, 1997, among GT Ltd., the financial institutions from time to time parties
thereto as lenders, Deutsche Bank AG, New York Branch, and Canadian Imperial
Bank of Commerce, as lead agents, Deutsche Bank AG, New York Branch, as
administrative agent, and Canadian Imperial Bank of Commerce, as syndication
agent, documentation agent and issuing bank (as the same may be amended,
supplemented or otherwise modified from time to time).
"Governmental Action": all permits, authorizations, registrations,
-------------------
consents, approvals, waivers, exceptions, variances, claims, orders, judgments
and decrees, licenses, exemptions, publications to the extent legally binding
upon the parties),filings (other than filings of a purely ministerial nature),
notices to and declarations of or with any Governmental Authority and shall
include, without limitation, all siting, environmental, construction and
operating permits and licenses that are required for the construction, use and
operation of the System.
2
"Governmental Authority": any nation or government, any state or other
----------------------
political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"IRU and Option Agreement": the Indefeasible Right of Use and Option
------------------------
Agreement, dated as of June 27, 1997, between and among Site Lessee, as
Grantor and Site Lessor, as Purchaser (as the same may be amended,
supplemented or otherwise modified from time to time).
"Lien": any mortgage, security interest, pledge, hypothecation,
----
encumbrance or lien (statutory or other) of any kind or nature whatsoever
(including, without limitation, any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, any construction
lien or any financing lease having substantially the same economic effect
as any such agreement and the filing of any statement under the Uniform
Commercial Code or comparable law of any jurisdiction).
"Person": an individual, partnership, corporation, business trust,
------
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Subordinated Security Agreement" shall mean the Subordinated Security
-------------------------------
Agreement, dated as of June 27, 1997, made by Site Lessee in favor of Site
Lessor, as the same may be amended, supplemented or otherwise modified from
time to time.
"Tax" or "Taxes": any and all fees (including, without limitation,
--- -----
documentation, recording, license and registration fees), taxes (including,
without limitation, net income, franchise, value added, ad valorem, gross
income, gross receipts, sales, use, rental, property (personal and real,
tangible and intangible) and stamp taxes), levies, imposts, duties,
charges, assessments or withholdings of any nature whatsoever, general or
special, ordinary or extraordinary, together with any and all penalties,
fines, additions to tax and interest thereon.
"U.S. Landing Assets and Rights": shall have the meaning given such
------------------------------
term in the Supply Contract.
"U.S. Personal Property Landing Assets and Rights and Rights": shall
-----------------------------------------------------------
have the meaning given such term in the Supply Contract.
"U.S. Real Property Landing Assets and Rights": shall have the meaning
--------------------------------------------
given such term in the Supply Contract.
10.2 (CONT.)
SUPPLEMENT ▇▇. ▇
▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇, dated as of December 1, 1997 (this "Supplement No.
2") to the Project Development and Construction Contract described below, among
Tyco Submarine Systems Ltd. formerly AT&T Submarine Systems, Inc. (the
"Contractor"), Global Telesystems Ltd. ("GTL"), GT Landing Corp. (the "U.S.
Subsidiary") GT U.K. Ltd (the U.K. Subsidiary"), Global Telesystems GmbH The
"German Subsidiary") and SSI Atlantic Crossing LLC (the "SSI Subsidiary"). (The
U.S Subsidiary, U.K. Subsidiary, German Subsidiary and the SSI subsidiary will
hereinafter be collectively referred to as the "Subsidiaries").
WITNESSETH
WHEREAS, unless otherwise defined herein, capitalized terms used
herein shall have the meanings given to them in the Contract and Supplement No.
1 described below;
WHEREAS, the Contractor and GTL have entered into the Project
Development and Construction Contract dated March 18, 1997 (as the same has been
and may from time to time be further amended, modified or supplemented, the
"Contracts), pursuant to which the Contractor has agreed to design, manufacture,
construct, install and deliver a fiber optic cable system connecting (a) the
United States to the United Kingdom, (b) the United Kingdom to Germany and (c)
Germany to the United States, all as more fully described in the Contract;
WHEREAS, the Contractor and GTL and the Subsidiaries entered into
Supplement No. 1, dated as of June 27, 1997 ("Supplement No. 1") pursuant to
which GTL transferred all rights under the Contract (i) with respect to the U.S.
Real Property Landing Assets and Rights to the U.S. Subsidiary, (ii) with
respect to the U.S. Personal Property Landing Assets and Rights to the SSI
Subsidiary, (iii) with respect to the U.K. Landing Assets and Rights to the U.K.
Subsidiary and (iv) with respect to the German Landing Assets and Rights to the
German Subsidiary;
WHEREAS, the Contractor and GTL have also entered into the Operations,
Administration and Maintenance Agreement dated as of March 25, 1997, pursuant to
which the Contractor has agreed, in accordance with the terms thereof, to
operate, administer and maintain the System;
WHEREAS, the Contractor and GTL and the Subsidiaries have also entered
into Supplement No. 1, dated as of June 27, 1997 to the OA&M Agreement (the
"OA&M Supplement") pursuant to which GTL transferred all rights under the OA&M
Agreement (i) with respect to the U.S. Personal Property Landing Assets and
Rights to the SSI Subsidiary, (ii) with respect to the U.K. Landing Assets and
Rights to the U.K. Subsidiary and (iii) with respect to the German Landing
Assets and Rights to the German Subsidiary.
WHEREAS, the Contractor and GTL have also entered into the Sales
Agency Agreement, dated as of March 25, 1997;
2
WHEREAS, the Contractor and GTL and the Subsidiaries have also entered
into Supplement No. 1, dated as of June 27, 1997 to the Sales Agency Agreement
(the "Sales Agency Supplement") pursuant to which Contractor, GTL, the U.S.
Subsidiary, the U.K. Subsidiary and the German Subsidiary supplemented the
provisions of the Sales Agency Agreement to reflect their agreement with respect
to the Landing Assets;
WHEREAS, Article 6 of the Contract contemplates that either Party may
propose a Contract Variation;
WHEREAS, Sub-Article 6(B) of the Contract requires that, a Contract
Variation shall not become effective unless and until the Parties execute a
supplement to the Contract describing their respective rights and obligations,
WHEREAS, Sub-Paragraph 9(C) of Supplement No. 1 provides that GTL and
its direct and indirect assignees and transferees shall act collectively under
the Contract and through GTL as its agent with respect to Contract Variations;
WHEREAS, GTL intends to form a wholly owned subsidiary in the
Netherlands (the "Netherlands Subsidiary") for the purpose of owning and
providing capacity the Netherlands Landing Assets and Rights;
WHEREAS, as soon as the Netherlands Subsidiary is formed, GTL will
assign and transfer all of its right, title and interest in, to and under the
Contract with respect to Netherlands Landing Assets and Rights to the
Netherlands Subsidiary;
WHEREAS, GTL for itself and on behalf of the Netherlands Subsidiary
and the Subsidiaries desires to add an additional landing site to the System at
The Netherlands (the "Netherlands Landings") so that it may provide service
between and among the United States mainland, United Kingdom, Germany and The
Netherlands;
WHEREAS, GTL for itself and on behalf of the Netherlands Subsidiary
and the Subsidiaries desires to modify Segment 3 of the System by splitting it
into two parts to include the Netherlands Landing as follows:
Segment 3a: from Germany to The Netherlands; and
Segment 3b: from The Netherlands to the United Kingdom;
WHEREAS, GTL seeks to purchase and own, as set forth herein, the
Netherlands Landing and wishes to engage Contractor to perform the Work related
thereto;
WHEREAS, the Netherlands Landing Assets and Rights will eventually be
owned by the Netherlands Subsidiary;
WHEREAS, Contractor is willing to perform the Work with respect to
Segment 3a and Segment 3b in accordance with and subject to the terms hereof;
3
NOW THEREFORE, in consideration of the premises, the Parties hereto
hereby agree as follows:
1. DOCUMENTS FORMING THE ENTIRE SUPPLEMENT
---------------------------------------
The Contract is hereby amended by adding section 7.0 to the Provisioning
Schedule at Appendix 1, and the Netherlands Landing Section of the Billing
Schedule at Appendix 2 and by deleting the portion of the Technical Volume,
Appendix 5 at Tab 1 (System Description), Tab 2 (System Performance
Availability), Tab 3, section 3.1.2 only (Submersible Equipment), Tab 7 (System
Commissioning and Acceptance) and Tab 11 (Straight Line Diagram), the Plan of
Work (Appendix 3), the Upgrade Plan of Work (Appendix 3A), and by inserting the
respective document set forth below in this Paragraph. This Supplement consists
of these terms and conditions and the following documents (in the form of
attachments, including appendices, attached hereto), which shall be read and
construed as part of the Supplement:
. Technical Volume, (Appendix 5) System Description (Tab 1), System
Performance Availability (Tab 2), Submersible Equipment, (Tab 3 section
3.1.2 only), System Commissioning and Acceptance (Tab 7) and Straight Line
Diagram (Tab 11)
. Plan of Work, (Appendix 3); Upgrade Plan of Work, (Appendix 3A)
. Provisioning Schedule section 7.0 (Appendix 1)
. Billing Schedule, Netherlands Landing Section (Appendix 2),
In the event of any inconsistency between the terms and conditions of the
Supplement and the above listed documents, the terms and conditions of the
Supplement shall prevail. The Appendices listed above have no order of
precedence.
2. DEFINED TERMS (a) Unless otherwise defined herein, capitalized
-------------
terms which are defined in the Contract or Supplement No. 1 are used herein as
therein defined.
(b) The Contract is hereby amended by deleting the definition of
"Billing Schedule", "Contract Price", "Phase 2 Segment", "Provisioning
Schedule", "Ready for Commercial Service", "Ready for Provisional Acceptance",
"Segment", "Segment 3", "System", "Technical Volume", "Upgrade Billing
Schedule", "Upgrade Plan of Work" and "Upgrade Provisioning Schedule" appearing
in Article 3 (Definitions) of the Contract, and by inserting the respective
definition as follows:
Billing Schedule means a billing schedule attached to the Contract as
----------------
Appendix 2 as supplemented by Supplement No. 2.
Contract Price means the Initial Contract Price, plus the Netherlands
--------------
Landing Price, plus any variations pursuant to Article 6 (Contract Variations),
Taxes as set forth in Sub-Article 4(B) and other adjustments to the Contract
Price provided for in this Contract.
Phase 2 Segment means Segment 2 at * per fiber pair on * fiber
---------------
pairs and Segment 1 at * per fiber pair on 4 fiber pairs.
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
4
Provisioning Schedule means the price schedule attached to the
---------------------
Contract as Appendix 1 as supplemented by the Supplement No. 2.
Ready for Commercial Service means (i) for any Segment, that (a) such
----------------------------
Segment has the ability to carry commercial traffic between the two landing
points of such Segment (at * per fiber pair on * fiber pairs in the case
of a Phase 1 Segment or a Phase 3 Segment and at * per fiber pair on *
fiber pairs for Segment 1 and * fiber pairs for Segment 2 in the case of a Phase
2 Segment and at * per fiber pair on * fiber pairs in the case of a Phase
4 Segment) meeting performance criteria of ITU-T G.826 as defined in the System
Performance section of the Technical Volume and has line monitoring and
protection switching capability, (b) Contractor has tested and provided for STM-
1 interconnectivity capability to the Segment terminal equipment according to
ITUT G.826, (c) Contractor has substantially performed its obligations under
Article 18 (Intellectual Property) then required to be performed by it, (d) all
Permits are obtained for such Segment, (ii) for the System, that the System has
the ability to carry commercial traffic throughout the System (at * per
fiber pair) meeting performance criteria of ITU-T G.826 as defined in the System
Performance section of the Technical Volume with self healing ring protection
capability and per Segment protection capability, has line monitoring and per
Segment protection switching capability and has network management capability,
(b) Contractor has tested and provided for STM-1 interconnectivity capability to
the System terminal equipment according to ITU-T G.826, (c) Contractor has
substantially performed its obligations under Article 18 (Intellectual Property)
then required to be performed by it, (d) an interconnect agreement is in place
with a bona fide carrier at each landing point, and (e) all Permits are obtained
for the System and (iii) for any System Upgrade, the System is Ready for
Commercial Service at the capacity specified for such System Upgrade.
Ready for Provisional Acceptance means (i) with respect to any
--------------------------------
Segment, (a) such Segment is complete in all material respects (and in any event
is Ready for Commercial Service), (b) the results of Acceptance Testing of such
Segment demonstrate that such Segment has satisfied the System Performance
Requirements, (c) Contractor has substantially performed its obligations under
Article 18 (Intellectual Property) then required to be performed by it, and (d)
all Permits are obtained for such Segment, (ii) with respect to the System, the
System is complete in all material respects (and in any event is Ready for
Commercial Service), all four Segments are Ready for Provisional Acceptance with
self-healing ring protection capability and per Segment protection capability
and line monitoring and network management capability and (iii) with respect to
any System Upgrade, the results of Acceptance Testing of such System Upgrade
demonstrate that such System Upgrade is complete in all material respects and is
sufficient to realize the Performance Requirements.
Segment means Segment 1, Segment 2, Segment 3a or Segment 3b as the
-------
case may be.
System means the four fiber pair submarine cable system consisting of
------
Segments 1, 2, 3a and 3b (at a per fiber pair capacity of * at the Date of
Commercial Service or the Date of Provisional Acceptance, as the case may be of
the System, with each
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
5
Segment upgradeable to * per fiber pair at the Date of Provisional
Acceptance) as more fully described in the System Description section of the
Technical Volume.
Technical Volume means the Technical Volume attached to the Contract
----------------
as Appendix 5, as modified by the Supplement No. 2.
Upgrade Plan of Work means the plan of work attached to this
--------------------
Supplement No. 2 as Appendix 3A.
Upgrade Provisioning Schedule means the provisioning schedule attached
-----------------------------
to the Contract as Appendix 1A, as supplemented by the Supplement No. 2.
(c) Article 3 of the Contract is hereby amended to add the following
definitions:
Netherlands Landing Assets and Rights means all Landing Assets and
-------------------------------------
Rights in the Netherlands.
Netherlands Landing Price has the meaning set forth in Paragraph 3 to
-------------------------
this Supplement No. 2.
Phase 3 Segment means Segment 2 or Segment 3a.
---------------
Phase 4 Segment means Segment 1, 2, 3a and 3b at 10 Gb/s per fiber
---------------
pair on 4 fiber pairs.
Segment 3a means Segment B2 as defined in the Technical Volume from
----------
Germany to the Netherlands and landing in locations capable of interconnecting
with major telecommunications carriers.
Segment 3b means Segment B1 as defined in the Technical Volume from
----------
the Netherlands to the United Kingdom and landing in locations capable of
interconnecting with major telecommunications carrier.
Supplement No. 2 means this supplement to the Contract (as the same
may from time to time be amended, modified or supplemented).
(d) Paragraph 1 of Supplement No. 1 is hereby amended by deleting the
definition of "Landing Countries", and by inserting the following:
Landing Countries means the United States of America, the United
-----------------
Kingdom, The Netherlands and Germany.
3. NETHERLANDS LANDING PRICE (a) the Price for the Netherlands
-------------------------
Landing in United States Dollars (US) is a fixed fee of * dollars (the
"Netherlands Landing Price"). The Netherlands Landing Price does not include the
cost of optional upgrades which
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
6
are described in Article 6A (Optional Upgrades) of the Contract, any contract
variations as provided for in Article 6 (Contract Variations) except the
contract variation provided for in this Supplement, any Taxes, services
performed pursuant to the Operations, Administration and Maintenance Agreement,
or services performed pursuant to the Sales Agency Agreement.
(b) The Netherlands Landing Price excludes any Tax.
4. TERMS OF PAYMENT The Contractor will send separate invoices to
----------------
the Netherlands Subsidiary once it has been formed, and GTL has assigned and
transferred all of its right, title and interest in, to and under the Contract
with respect to the Netherlands Landing Assets and Rights, for payment for the
Netherlands Landing Assets and Rights.
5. ACCEPTANCE Article 8 Sub-Article (A)(7) of the Contract is hereby
----------
deleted and the following is inserted in its place: "The Contractor agrees that
the Date of Provisional Acceptance or Commercial Service of the System will
occur by February 22, 1999 (as such date may be extended under Article 6
(Contract Variations), Article 17 (Force Majeure) or otherwise under this
Contract or by agreement of the Parties, the "Scheduled RFS Date"). The
Contractor shall use reasonable efforts to be Ready for Provisional Acceptance
or Commercial Service with respect to Segment 1 with a capacity of * per fiber
pair on * by November 30, 1998 and with respect to Segment 3a with a capacity of
* per fiber pair on * by January 12, 1999."
6. NOTICES Any notice, consent, approval, or other communication
-------
pursuant to this Supplement shall be in writing, in the English language, and
shall be effected in the manner provided in Sub-Article 35(A) of the Contract
and Paragraph 17 of Supplement No. 1, and in the case of the Netherlands
Subsidiary, at the address specified below its signature hereto or to GTL as its
agent for notices.
7. REPRESENTATIONS BY GTL GTL represents and warrants that the
----------------------
Netherlands Subsidiary will be a direct, wholly-owned subsidiary and
acknowledges and agrees that any transfer of any interest in the Netherlands
Subsidiary (or any other person or entity with any Landing Assets and Rights)
will be subject to the Transfer Restrictions to the same extent as a transfer of
any Landing Assets and Rights and further agrees that it will cause each direct
or indirect transferee of any such interest to acknowledge and agree that such
transferee is also subject to the Transfer Restrictions with respect to such
interest.
8. JOINT AND SEVERAL LIABILITY (a) Paragraph 3(b) of Supplement No.
---------------------------
1 is hereby amended to provide: The U.S. Subsidiary, the U.K. Subsidiary and the
Netherlands Subsidiary shall be jointly and severally liable, together with GTL,
for all of GTL's obligations under the Contract, including without limitation,
GTL's obligations under paragraph (a) above."
(b) Paragraph 3(d) of Supplement No. 1 is hereby amended to provide: "GTL, the
U.K. Subsidiary and the Netherlands Subsidiary shall be jointly and severally
liable with the U.S. Subsidiary to pay the IRU Price."
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
7
9. GOVERNING LAW This Supplement shall be governed by, and construed
-------------
and interpreted in accordance with, the laws of the State of New York, United
States.
10. ASSIGNMENT TO NETHERLANDS SUBSIDIARY When the Netherlands
------------------------------------
Subsidiary is formed, the Parties hereto will execute and deliver a Supplement
to the Contract to assign and transfer the contract rights in the Netherlands
Landing Assets and Rights to the Netherlands Subsidiary containing provisions
similar to the provisions of Supplement No.1 to the Contract.
11. ARRANGEMENT WITH DEUTSCHE TELEKOM AG The Parties hereby
------------------------------------
acknowledge and agree that the lease agreement between De Te Immobilien ("De
Te") and the German Subsidiary (the "Lease") for the lease of floor space in the
Cable Station located in Westerland, Germany shall be for a minimum square
meters of 735 square meters on two floors. Nothing contained in the Lease or any
other contract between GTL and/or the German Subsidiary and De Te and/or
Deutsche Telekom AG shall change, limit or otherwise alter the minimum amount of
floor space stated in this Paragraph.
12. MISCELLANEOUS Except as expressly amended or supplemented herein,
-------------
the Contract and Supplement No. 1 shall continue to be, and shall remain, in
full force and effect in accordance with its terms. This Supplement may be
executed by the parties in any number of separate counterparts (including
facsimile transmission) and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, each of the undersigned has caused this Supplement
to be duly executed and delivered in _______________ by its proper and duly
authorized officer as of the date hereof.
8
TYCO SUBMARINE SYSTEMS LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------
Title: President
Signed in: USA
9
GLOBAL TELESYSTEMS LTD.
By: /s/ K. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Title: Executive Director
Signed in: Bermuda
10
GT LANDING CORP.
By: /s/ K. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Title: Director
Signed in: Bermuda
11
GT U.K. LTD.
By: /s/ K. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Title: Director
Signed in: Bermuda
12
GLOBAL TELESYSTEMS GmbH
By: /s/ K. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Title: Director
Signed in: Bermuda
13
SSI ATLANTIC CROSSING LLC
By: /s/
-----------------------------------
Title: Vice President
Signed in: USA