Ex-10.4
Schedules to
Restated Shareholders
Agreement
Annex 2
to Further Restated Shareholders Agreement
TERMS FOR THE CUSTOMER MARKETING AGREEMENT
(SEE CLAUSE 3.3(b))
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Subject Terms
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Brand The parties agree that whenever they sell to customers any of the
products covered by this customer marketing agreement, they will
communicate clearly and prominently to the customer that they
will use the networks of the other party to this agreement.
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Products The parties will agree a product range to be included in the
customer marketing agreement.
--------------------------------------------------------------------------------
Prices The parties will agree favorable prices that each will charge the
others for each of the products included in the customer
marketing agreement.
--------------------------------------------------------------------------------
Preferred Each party will preferentially use the other party's network to
Supplier fulfil the capacity needs of its customers for locations on the
Rights other party' network that is not fulfilled by its own network,
provided that the price offered by the other party for such
capacity needs is less than or equal to the price offered by any
third party for such capacity needs on similar terms and
conditions and the quality of the capacity offered by the other
party is not less than that offered by such third party.
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18
Annex 3
to Further Restated Shareholders Agreement
CAPACITY RIGHT OF USE AGREEMENT
THIS AGREEMENT dated as of the ______ day of ______________ 1999, is among FLAG
ATLANTIC LIMITED, a company organised under the laws of Bermuda and having its
principal office at The Emporium Building, 69 Front Street, 4th Floor, Hamilton,
Bermuda, FLAG ATLANTIC USA LIMITED, a company organised under the laws of
Delaware, USA and having its principal office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇, (FLAG ATLANTIC LIMITED and FLAG ATLANTIC USA
LIMITED being hereinafter jointly and severally referred to as "FA-1") and [ ]
("Purchaser"), a [ ] organised under the laws of [ ] and having its principal
office at [ ].
WITNESSETH:
WHEREAS, except as set out below, FLAG Atlantic Limited is constructing and will
directly and/or indirectly own, operate and maintain a fiberoptic cable system
to be known as FLAG Atlantic-1 as more fully described in Schedule 1 (the
"System"); and
WHEREAS, FLAG Atlantic USA Limited is constructing and will own all that part of
the System that is within the territory (including the territorial waters) of
the United States of America; and
WHEREAS, the System is currently scheduled to go into service in stages with the
initial stage, as more particularly described in Schedule 1, ("Initial Stage")
currently scheduled to go into service on or about 31 March 2001 ("Scheduled
Initial RFS Date"); and
WHEREAS, Purchaser desires to acquire from FA-1, and FA-1 is willing to provide
to Purchaser, a right of use in the capacity on the System as set out in
Schedule 2 (the "Capacity"); and
WHEREAS, FLAG Atlantic Limited, FLAG Atlantic USA Limited and Purchaser (the
"Parties") desire to define the terms and conditions under which the Capacity
will be acquired by Purchaser.
NOW, THEREFORE, the Parties hereby agree as follows:
1. PURCHASE OF CAPACITY
1.1 Purchaser agrees to acquire the right to use the Capacity for the purchase
price set forth in Schedule 2 (the "Purchase Price"), subject to the terms
and conditions of this Agreement.
1.2 Individual units of Capacity as set out in Schedule 2 (each a "Unit")
shall be available for activation in tranches (each a "Tranche") pursuant
to the delivery schedule set out in Schedule 3. FA-1 shall notify
Purchaser of the actual date upon which the Initial Stage of the System is
able to carry commercial traffic ("Initial RFS Date"). FA-1 shall further
notify Purchaser of the actual date upon which Units of Capacity within
subsequent Tranches are available for activation ("Availability Notice").
Subject to the foregoing, when Purchaser wishes to activate one or more
Units of Capacity it shall provide FA-1 with a notice ("Activation
Notice") indicating the
Page 1 of 18
number of Units of Capacity that Purchaser wishes to activate ("Requested
Capacity") and a proposed activation date for each Unit of Capacity.
1.3 In accordance with the provisions of clause 1.2 Purchaser shall:
1.3.1 Within 90 days of the date hereof, provide FA-1 with an
estimate of the initial number of Units of Capacity it will wish to
activate pursuant hereto following the Initial RFS Date.
1.3.2 Not less than 60 days prior to the Scheduled Initial RFS Date,
provide FA-1 with an Activation Notice indicating the Requested
Capacity it wishes to activate pursuant hereto following the Initial
RFS Date.
1.3.3 For each of Tranches 2, 3 and 4 provide FA-1 with an
Activation Notice indicating the Requested Capacity it wishes to
activate within the Tranche 45 days prior to the beginning of the
quarter in which the Capacity within that Tranche will be available
for activation.
1.3.4 Subject to clause 1.3.2, when it wishes to activate any Units
of Capacity within a Tranche, provided that an Availability Notice
has been delivered for that Tranche and Purchaser has activated all
the Capacity within the previous Tranche, provide FA-1 with an
Activation Notice therefor not less than 45 days prior to the
proposed activation date.
1.4 FA-1 shall use reasonable endeavours to ensure that the date upon which
Requested Capacity is activated (the "Date of Activation") is on or before
the proposed activation date set out in the Activation Notice for such
Requested Capacity.
1.5 Subject to Purchaser paying the Purchase Price in accordance with the
terms of this Agreement, Purchaser shall have the right, subject to the
terms of this Agreement, to use such Requested Capacity from the Date of
Activation until the System is decommissioned. Purchaser shall have no
legal ownership or other rights in the System itself, in any proceeds from
the disposition of the System or in any other capacity therein, except as
specifically provided in Schedule 3.
1.6 Purchaser shall be entitled to collocation pursuant to a collocation
agreement to be negotiated between the Parties based on the principles set
out in Schedule 4.
2. PAYMENTS
2.1 Purchaser shall pay to FA-1 the Purchase Price for Capacity to be acquired
pursuant hereto as follows (and all such payments shall be non-refundable
except as otherwise provided in clause 4.4):
2.1.1 Purchaser shall pay to FA-1 30% of the Purchase Price on
receipt of a notice from FA-1 that FA-1 Financial Closure (as
defined in clause 22) has occurred.
2.1.2 Purchaser shall pay the remaining 70% of the Purchase Price
pursuant to the payment schedule set out in Schedule 2 ("Payment
Schedule").
Page 2 of 18
2.2 Purchaser shall pay to FA-1 such amounts for the operation and maintenance
of the System as are set forth in, or determined pursuant to, Schedule 5
("O&M Payments").
2.3 FA-1 shall render to Purchaser invoices for amounts payable pursuant to
this Agreement. Invoices for the Purchase Price shall be rendered in
accordance with clause 2.1. Invoices for O&M Payments shall be rendered
pursuant to Schedule 5. All invoices shall be due and payable within 30
days after delivery to Purchaser.
2.4 Any amount payable pursuant to this Agreement which is not paid when due
shall accrue interest at the annual rate of 3% above the U.S. Dollar LIBOR
for one month as quoted in The Wall Street Journal on the first business
day of the month in which the payment is due. All such default interest
shall accrue from the day following the date payment of the relevant
amount was due until it is paid in full and shall accrue both before and
after judgement. Such interest shall be payable on demand.
2.5 All amounts payable by Purchaser pursuant hereto shall be paid in full in
U.S. dollars (or such other currency as FA-1 may designate) by wire
transfer free and clear of all bank or transfer charges to such account(s)
as FA-1 may by notice to Purchaser designate without reduction for any
deduction or withholding for or on account of any tax, duty or other
charge of whatever nature imposed by any taxing authority. If Purchaser is
required by law to make any deduction or withholding from any payment
hereunder, Purchaser shall pay such additional amount to FA-1 so that
after such deduction or withholding the net amount received by FA-1 will
be not less than the amount FA-1 would have received had such deduction or
withholding not been required. Purchaser shall make the required deduction
or withholding, shall pay the amount so deducted or withheld to the
relevant governmental authority and shall promptly provide FA-1 with
evidence of such payment.
2.6 In the case of payments of the Purchase Price, until the Initial RFS Date
there shall be such controls over the account(s) designated by FA-1
pursuant to clause 2.5 so as to ensure that payments of the Purchase Price
may only be used to make timely payments required to be made by FA-1 in
connection with the planning, design, construction and project management
of the System. Any interest arising from amounts held in the account(s)
shall accrue for the benefit of FA-1.
2.7 Purchaser's obligation to pay the Purchase Price and other amounts shall
not be subject to any rights of set-off, counterclaim, deduction, defense
or other right which Purchaser may have against FA-1 or any other party.
2.8 Within 14 days after the date of this Agreement Purchaser shall deliver to
FA-1 such security for payment of the Purchase Price as is set forth in
Schedule 6.
Page 3 of 18
3. TAXES
Save as the context requires or as otherwise stated herein all
references to payments made in this Agreement are references to such
payments exclusive of all sales and use taxes, gross turnover taxes, value
added taxes, or other similar turnover or sales based taxes, excise taxes,
duties, fees, charges, levies, surcharges to recover the cost of universal
service contributions, or similar liabilities (other than the general
income taxes of FA-1) imposed by any authority, government or government
agency in connection with or as a result of or in respect of the supply
for which the payment is or is deemed to be consideration (collectively
"taxes"). Where applicable such taxes shall be added to the invoice and
shall be paid to FA-1 at the same time as the relevant invoice is settled
in accordance with clause 2.
4. DEFAULT AND TERMINATION
4.1 In the event that Purchaser shall have failed to pay any amount payable by
Purchaser pursuant hereto (including but not limited to any O&M Payments)
for more than 30 days after its due date, then FA-1 may deactivate all
then activated Capacity (and refuse to activate any additional Capacity)
until Purchaser has paid in full all amounts overdue together with
applicable default interest.
4.2 If the defaulted payment is for any portion of the Purchase Price and such
default continues for a further period of 30 days, FA-1 may, in its
discretion, either:
4.2.1 require Purchaser forthwith to pay the unpaid balance of the
Purchase Price; or
4.2.2 terminate this Agreement and relieve Purchaser of its
obligation to pay any portion of the Purchase Price which has not
yet become due and its right to acquire Capacity pursuant hereto.
Neither such termination of this Agreement nor the exercise by FA-1 of
such remedy shall relieve Purchaser of its obligation to pay amounts
already due hereunder plus default interest thereon.
1.3 FA-1 reserves the right to temporarily or permanently deactivate all then
activated Capacity (and refuse to activate any additional Capacity) and/or
to disconnect Purchaser's equipment from the System in the event that
Purchaser is in breach of clause 9.1 or if, in FA-1's reasonable
judgement, Purchaser's use of the System may damage or disrupt the System.
4.4 Except as provided herein, Purchaser shall have no right to terminate or
cancel this Agreement for any reason whatsoever. If the Initial RFS Date
has not occurred within 12 months after the Scheduled Initial RFS Date (24
months if the delay is caused by a force majeure event) Purchaser may by
two months written notice terminate its purchase of the Capacity.
Purchaser shall have no obligation to make any further payments under this
Agreement following such termination and FA-1 shall within 60 days of such
termination refund to Purchaser any portion of the Purchase Price already
paid by Purchaser to FA-1 which has not been used to make timely payments
required to be made by FA-1 in connection with the planning, design,
construction and project management of the System. The foregoing shall be
the limit of Purchaser's rights for delays to the Initial RFS Date.
Page 4 of 18
5. OPERATION AND MAINTENANCE
5.1 FA-1 shall be responsible for the operation and maintenance of the System
including arranging for the repair of the System in the event of any
fault. Purchaser's sole responsibility with regard to operation and
maintenance of the System shall be to make the O&M Payments as and when
they become due pursuant to this Agreement.
5.2 FA-1 shall provide the service level guarantees set out in Schedule 5.
5.3 FA-1 shall promulgate procedures for the maintenance, use and operation of
the System according to standards generally accepted in the
telecommunications cable industry and shall provide Purchaser with a copy
thereof. FA-1 may from time to time amend such procedures and shall
provide Purchaser with a copy of each amendment prior to its
effectiveness.
6. RESTORATION
FA-1 shall provide restoration on the System to the extent set forth in
Schedule 1. If such restoration is not sufficient for Purchaser, then
Purchaser shall be responsible for making its own restoration arrangements
for Capacity which is then activated.
7. SYSTEM ENHANCEMENTS AND UPGRADES
FA-1 reserves the right to upgrade the amount of the capacity of the
System and to make any enhancements to the System from time to time. The
rights granted to Purchaser in this Agreement do not extend to
participating in System enhancements or upgrades except to the extent
referred to in Schedule 3. FA-1 shall use reasonable efforts to minimise
the interruption, interference or impairment of the System caused by the
implementation of any such enhancement or upgrade.
8. SYSTEM DECOMMISSIONING
The System shall be decommissioned at such time, no earlier than 15
years and no later than 25 years from the Initial RFS Date, as either FA-1
or the holders of three quarters of the then activated capacity on the
System determine that the System is technically obsolete or has reached
the end of its useful economic life. There shall be no compensation
payable to Purchaser whether Purchaser voted for or against
decommissioning. This provision is without prejudice to the rights of FA-1
to decommission the System without any liability to Purchaser whatsoever,
in the event of a catastrophic failure of all or a portion of the System,
whether caused by natural hazard or major technical fault, which makes it
impossible to maintain the business efficacy of the System, or if any
governmental, municipal, institutional, or commercial authority, license,
permission authorisation, right, or concession necessary for the business
efficacy of the System is not granted, subject to prohibitive conditions
or is terminated with no reasonable prospect of retrieval within a period
of 12 months following the date of termination.
Page 5 of 18
9 REPRESENTATIONS AND WARRANTIES
9.1 Purchaser represents and warrants to FA-1 as follows:
9.1.1 Purchaser is duly established and in good standing under the laws of
[ ] and has full power and authority to enter into this Agreement.
9.1.2 This Agreement constitutes the legal, valid and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its
terms.
9.1.3 Purchaser has obtained or will obtain all necessary consents,
licenses, permits and other approvals, both governmental and
private, as may be necessary to permit Purchaser to perform its
obligations under this Agreement and to acquire and use the
Capacity.
9.1.4 Purchaser shall perform its obligations under this Agreement and use
the Capacity in a manner consistent with applicable law, and shall
not use, or permit the Capacity to be used, for any illegal purpose
or in any other unlawful manner.
1.3 FLAG Atlantic Limited and FLAG Atlantic USA Limited each represents and
warrants to Purchaser as follows:
0.3.1 It is duly established and in good standing under the laws of
the country of its incorporation and has full power and
authority to enter into this Agreement.
0.3.2 This Agreement constitutes its legal, valid and binding
obligation enforceable against it in accordance with its
terms.
0.3 Except as provided above, FA-1 disclaims, and Purchaser waives, all
representations and warranties regarding the Capacity, including any
warranty of merchantability or fitness for a particular use, and in
particular, without limiting the foregoing FA-1 does not warrant that the
Capacity will be uninterrupted or error free or that the Capacity will
meet Purchaser's requirements for the equipment to be deployed by
Purchaser in connection with the Capacity or services to be offered by
Purchaser utilising this equipment.
10. FORCE MAJEURE
No failure or omission by any Party to carry out or observe any of the
terms and conditions of this Agreement (other than any payment obligation)
shall give rise to any claim against such Party or be deemed a breach of
this Agreement if such failure or omission arises from an act of God, an
act of any government or any other circumstance commonly known as "force
majeure".
11. CONFIDENTIALITY
Other than in connection with an assignment permitted under clause 13 or
if it is required by applicable law in connection with the enforcement of
this Agreement, neither FA-1 nor Purchaser shall disclose the terms of
this Agreement to any third party without the prior written consent of the
other Party. Without limiting the generality of the foregoing, neither
FA-1 nor
Page 6 of 18
Purchaser shall issue any press release or otherwise publicise the
existence or the terms of this Agreement without the prior written consent
of the other Party.
12. NO LICENCE
12.1 Nothing in this Agreement shall or shall be deemed to give rise to any
right of Purchaser to use any FA-1 Intellectual Property.
12.2 For the purposes of this clause "Intellectual Property" means any and all
patents, trade marks, rights in designs, copyrights, and topography
rights, (whether registered or not and any applications to register or
rights to apply for registration of any of the foregoing), rights in
inventions, know-how, trade secrets and other confidential information,
rights in databases and all other intellectual property rights of a
similar or corresponding character which may now or in the future subsist
in any part of the world, and "FA-1 Intellectual Property" means
Intellectual Property owned by or licensed to FA-1 together with the
goodwill relating thereto.
13. ASSIGNMENT
13.1 This Agreement and all the provisions hereof shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors
and permitted assigns; provided that, except for the assignment of FA-1's
rights (but not its obligations) under this Agreement to one or more
financial institutions and/or export credit agencies as collateral
security for financing provided to FA-1 or in connection with a sale of
receivables by FA-1 and the assignment by such financial institutions (and
their assignees) of the rights and obligations under this Agreement to any
other persons following exercise of any rights or remedies on such
collateral security, neither this Agreement nor any of the rights,
interest or obligations hereunder shall be assigned or transferred by any
of the Parties hereto without the prior written consent of the other
Parties, and any attempted assignment or transfer in violation of this
clause shall be void.
13.2 Notwithstanding clause 13.1, FLAG Atlantic Limited and FLAG Atlantic USA
Limited may allocate their rights and obligations under this Agreement
between themselves and their affiliates.
13.3 FLAG Atlantic Limited and FLAG Atlantic USA Limited may use subcontractors
or agents to fulfil their obligations hereunder.
14. ENTIRE AGREEMENT
This Agreement constitutes the whole agreement between the Parties and
supersedes any previous agreements, arrangements or understandings between
them relating to the subject matter hereof. Each of the Parties
acknowledges that it is not relying on any statements, warranties or
representations given or made by any of them relating to the subject
matter hereof, save as expressly set out in this Agreement.
15. VARIATION
No variation or amendment to this Agreement shall be effective
unless in writing signed by authorised representatives of each of the
Parties.
Page 7 of 18
16. WAIVER
16.1 Failure by a Party at any time to enforce any of the provisions of this
Agreement shall neither be construed as a waiver of any rights or remedies
hereunder nor in any way affect the validity of this Agreement or any part
of it and no waiver of a breach of this Agreement shall constitute a
waiver of any subsequent breach.
16.2 Termination of this Agreement shall not operate as a waiver of any breach
by a Party of any of the provisions hereof and shall be without prejudice
to any rights or remedies of a Party which may arise as a consequence of
such breach or which may have accrued hereunder up to the date of such
termination.
16.3 No waiver of a breach of this Agreement shall be effective unless given in
writing.
17. INVALIDITY
0.1 Subject to clause 17.2 below if any provision of this Agreement is or
becomes (whether pursuant to any judgment or otherwise) invalid, illegal
or unenforceable in any respect under the law of any applicable
jurisdiction:
0.1.1 the validity, legality and enforceability under the law of
that jurisdiction of any other provision; and
0.1.2 the validity, legality and enforceability under the law of any
other jurisdiction of that or any other provision,
shall not be affected or impaired in any way thereby.
0.2 The Parties acknowledge that the consideration for the Capacity set out in
clause 2 was agreed upon taking into account clauses 4, 8, 9, and 19 and
in the event any of these clauses is or becomes (whether pursuant to any
judgment or otherwise) invalid, illegal or unenforceable in any respect
under the law of any jurisdiction, the Parties agree to renegotiate in
good faith the amounts payable by Purchaser under clause 2.
18. NOTICE
18.1 Any notice, request, demand or other communication required or
permitted hereunder shall be sufficiently given if in writing in English
and delivered by hand or sent by prepaid registered or certified mail
(airmail if international), by facsimile or by prepaid international
courier service of international reputation addressed to the appropriate
Party at the following address or to such address as such Party may from
time to time designate:
If to Purchaser:
Page 8 of 18
[name if different then Purchaser]
[address]
Attention: [ ]
Tel: [ ]
Fax: [ ]
If to FA-1:
FLAG Atlantic Limited
The Emporium Building
69 Front ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: FLAG Atlantic-I
Tel: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
FLAG Telecom Limited
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ -- ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
U.K.
Attention: General Counsel
Tel: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
GTS Carrier Services
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Attention: General Counsel
Tel: ▇▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇▇-▇▇▇-▇▇▇▇
18.2 Purchaser acknowledges that all communications in connection with
this Agreement shall be between Purchaser and FLAG Atlantic Limited. For
this purpose, FLAG Atlantic USA Limited hereby appoints FLAG Atlantic
Limited as its agent to receive and send all communications in connection
with this Agreement.
Page 9 of 18
18.3 Any notice, request, demand or other communication given or made
pursuant to this clause shall be deemed to have been received (i) in the
case of hand delivery or courier, on the date of receipt as evidenced by a
receipt of delivery from the recipient, (ii) in the case of mail delivery,
on the date which is seven days after the mailing thereof and (iii) in the
case of transmission by facsimile, on the date of transmission with
confirmed answer back. Each such communication sent by facsimile shall be
promptly confirmed by notice in writing hand-delivered or sent by courier,
mail or air mail as provided herein, but failure to send such a
confirmation shall not affect the validity of such communication.
37. LIABILITY
37.1 Except to the extent stated in clause 4.4 and Schedule 5, FA-1 shall not
be liable to Purchaser for any loss or damage sustained by reason of any
delay in completion, failure or breakdown of the facilities constituting
the System or any interruption of service, regardless of the cause of such
delay in completion, failure or breakdown, and regardless of how long it
shall last.
37.2 Notwithstanding any other provision in this Agreement to the contrary, no
Party shall be liable to any other Party for any indirect, special,
punitive or consequential damages (including, but not limited to, any loss
of profit or business or claim from any customer for loss of services)
arising out of this Agreement or from any breach of any of the terms and
conditions of this Agreement.
19.3 Any financier of the System, at its election, shall have a right to
cure any breach by FLAG Atlantic Limited (or, if applicable, an affiliate
thereof) under this Agreement, provided however, that such financier shall
not assume any liabilities of FLAG Atlantic Limited under this Agreement.
20. COUNTERPARTS
This Agreement may be executed in counterparts. Any single
counterpart or set of counterparts signed, in either case, by all the
Parties hereto shall constitute a full and original agreement for all
purposes.
21. WAIVER OF IMMUNITY
The Parties acknowledge that this Agreement is commercial in nature,
and the Parties expressly and irrevocably waive any claim or right which
they may have to immunity (whether sovereign immunity or otherwise) for
themselves or with respect to any of their assets in connection with an
arbitration, arbitral award or other proceedings to enforce this
Agreement, including, without limitation, immunity from service of
process, immunity of any of their assets from pre- or post-judgment
attachment or execution and immunity from the jurisdiction of any court or
arbitral tribunal.
Page 10 of 18
22. FA-1 FINANCIAL CLOSURE
22.1 The obligation of the Purchaser to pay the Purchase Price (or any
instalment thereof) and the obligation of FA-1 to provide the Capacity are
conditional upon the occurrence of FA-1 Financial Closure.
22.2 If FA-1 Financial Closure has not occurred by 31 October 1999, then
this Agreement shall terminate (with the exception of clauses 11, 19, 21
and 23 which shall survive termination).
1.3 For the purposes of this Agreement, "FA-1 Financial Closure" shall be
deemed to take place on the date when FA-1 and its shareholders have put
in place arrangements satisfactory to them for the financing of the
construction of the System.
23. GOVERNING LAW AND DISPUTE RESOLUTION
23.1 This Agreement shall be construed in accordance with New York law,
without regard to the law of New York governing conflicts of law.
23.2 Except as otherwise provided herein, any dispute or controversy
arising under or in connection with this Agreement shall be finally
settled under the Rules of Arbitration of the International Chamber of
Commerce by one arbitrator appointed in accordance with such Rules. The
place of arbitration shall be London. The arbitration shall be conducted
in English. The decision and award resulting from such arbitration shall
be final and binding on the Parties. Judgment upon the arbitration award
may be rendered by any court of competent jurisdiction, or application may
be made to such court for a judicial acceptance of the award and an order
of enforcement. Insofar as permissible under the applicable laws, the
Parties hereby waive all rights to object to any action for judgment or
execution which may be brought before a court of competent jurisdiction on
an arbitration award or on a judgment rendered thereon.
Page 11 of 18
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first set forth above.
FLAG ATLANTIC LIMITED
By ____________________
Name:
Title:
FLAG ATLANTIC USA LIMITED
By ____________________
Name:
Title:
[PURCHASER]
By ____________________
Name:
Title:
Page 12 of 18
SCHEDULE I
DESCRIPTION OF SYSTEM
A trans-Atlantic cable system known as FLAG Atlantic-I which is to operate from
London and Paris to New York and will include a trans-Atlantic subsea element
and backhaul elements in Europe and the United States.
The subsea element will involve the construction of four landing stations ("the
Landing Stations"), a six fibre pair ring system across the Atlantic Ocean, with
six fibre pairs connecting the US Landing Stations and six fibre pairs
connecting the European Landing Stations. The Landing Stations are currently
expected to be at (i) Cornwall (UK), (ii) St. Brieuc (France), (iii) Makamah
Beach on the ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ (▇▇) and (iv) Long Beach on
the South shore of Long Island, New York (US). Each fibre pair will be designed
for a maximum capacity of 40 wavelengths with each wavelength running at 10
Gbps.
The backhaul elements will seamlessly connect the Landing Stations to the
digital/optical input/output port on the digital/optical distribution frame
("Terminal Point") in the heart of London, Paris and Manhattan, New York City.
The initial stage of the system will consist of the Northern subsea link from
Cornwall to the North shore of Long Island, the Cornwall to Brittany
Trans-Channel link and the backhaul elements (which includes the terrestrial
link between the North shore and the South shore of Long Island). The full
system will consist of the initial stage and the Southern subsea link from
Brittany to the south shore of Long Island ("Full System").
The system will be installed initially with 160 Gbps of capacity but will be
designed with technology capable of upgrade to 2.4 terabits per second.
The base system has been designed to provide restoration within its own
capabilities by way of protection switching. This has been achieved by means of
a redundant multi-loop architecture within the system which provides redundancy
in the event of a failure of any component within the system.
The system will have:
- the ability to carry commercial traffic between any two points (consisting
of one or many segments) which meets ITU-T G.826.
- automatic self-healing ring protection between any two points (consisting
of one or many segments)
- network management capability for the system as a whole.
Page 13 of 18
SCHEDULE 2
1. Capacity
--------------------------------------------------------------------------------
Route Capacity Purchase Price US$
(each STM within the (excl. taxes)
package of 8 x STM
being a "Unit")
--------------------------------------------------------------------------------
o Amount of Capacity from One package of 8 x US$
Terminal Point STM___
facilities in New York
City to the Terminal
Point facilities in
London
--------------------------------------------------------------------------------
o Amount of Capacity from One package of 8 x US$
Terminal Point STM___
facilities in New York
City to the Terminal
Point facilities in
Paris
--------------------------------------------------------------------------------
Total Purchase
Price US$
--------------------------------------------------------------------------------
2. Payment Schedule
--------------------------------------------------------------------------------
Date Percentage of
Purchase
Price
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Tranche 1* -- Initial RFS Date 20%
--------------------------------------------------------------------------------
Date on which FA-1 notifies Purchaser 20%
that the Full System is able to carry
commercial traffic.
--------------------------------------------------------------------------------
Date of Notice of Availability for Tranche 2* 10%
--------------------------------------------------------------------------------
Date of Notice of Availability for Tranche 3* 10%
--------------------------------------------------------------------------------
Date of Notice of Availability for Tranche 4* 10%
--------------------------------------------------------------------------------
* As set out in Schedule 3
Page 14 of 18
SCHEDULE 3
DELIVERY SCHEDULE
Purchaser's Capacity will be made available for activation as follows:
--------------------------------------------------------------------------------
Availability schedule Date Capacity available to activate
--------------------------------------------------------------------------------
Tranche 1 Initial RFS Date 1 x STM-___
--------------------------------------------------------------------------------
Tranche 2 Q4 2002 1 x STM-___
--------------------------------------------------------------------------------
Tranche 3 Q4 2003 2 x STM-___
--------------------------------------------------------------------------------
Tranche 4 Q4 2004 4 x STM-___
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Page 15 of 18
SCHEDULE 4
Provisions for Collocation Agreement
If Purchaser desires to install equipment at the Terminal Point in order to
connect to the Capacity, the Parties agree to negotiate in good faith a
Collocation Agreement which shall be based on the following principles:
1. Purchaser shall be granted a license to place its equipment in racks at
the Terminal Point premises for the term of this Agreement. Purchaser will
pay a fair market price per rack per annum for use of the racks, payable
annually in advance.
2. Purchaser shall be permitted to use the racks only for the purpose of
connecting to the System.
3. Access to the Terminal Point premises will be available to Purchaser's
authorised personnel on a 24*365 basis subject to compliance with safety,
security and access rules.
4. Commercial terms for services (such as installation, first line
maintenance, shifts and changes) and for utilities (such as power heating
lighting) to be provided by FA-1 at the Terminal Point are to be
negotiated.
5. Assignment or sublicensing of the racks by Purchaser is prohibited.
Page 16 of 18
SCHEDULE 5
O&M PAYMENTS
1. Purchaser shall pay to FA-1 on activated Capacity annual operation and
maintenance charges ("O&M Charges") as specified in the attached annex.
Upon the Date of Activation of a Unit of Capacity FA-1 shall render an
invoice for the O&M Charges on such Unit of Capacity from the Date of
Activation until the end of then calendar year. Thereafter the O&M Charges
on such Unit of Capacity shall be invoiced annually in advance on or about
1 January in each year.
2. FA-1 will use commercially reasonable efforts to provide restoration on
the System so that each Unit of Capacity achieves a level of availability
to carry traffic between the relevant Terminal Points of 99.50% per month
as from the date on which FA-1 notifies Purchaser that the Full System is
able to carry commercial traffic ("Availability Level"). Failure to
achieve this Availability Level in any calendar month shall entitle
Purchaser to a credit of 8% of the annual O&M Charges. Availability Level
will be calculated each calendar month as follows:
(Total time for month [x] - Sum of all events of unavailable time as agreed
during fault clearance) * 100
---------------------------------------------------------------------------
Total time for month [x]
Per event, unavailable time begins at the time of Purchaser problem
reporting, or FA-1 problem detection, whichever is earlier. Unavailable
time ends as agreed between FA-1 and Purchaser during fault clearance.
Unavailable time is measured between Terminal Points.
Planned works notified to Purchaser at least 15 days in advance are
excluded from availability calculations.
Credits shall be applied against payment obligations of Purchaser under
this Agreement and if there are any outstanding credits upon termination
of this Agreement and there are no longer any payment obligations of
Purchaser, FA-1 shall pay to Purchaser an amount equal to the outstanding
credits. Credits provided pursuant to the foregoing shall be the limit of
Purchaser's rights under this Agreement if activated Capacity is not able
to carry traffic.
Page 17 of 18
SCHEDULE 6
SECURITY
Standby irrevocable letter of credit with an expiration date 60 days after the
date that the last percentage of the Purchase Price is payable in accordance
with Schedule 2 for full payment of the Purchase Price issued on Purchaser's
behalf by a bank rated A or better by Standard & Poor's (or the equivalent by
▇▇▇▇▇'▇) in favour of FA-1 and otherwise in form and substance satisfactory to
FA-1.
Page 18 of 18
Annex 5
to Further Restated Shareholders Agreement
Backhaul Technical Specification
Contents
1. Introduction 2
2. Network Design 2
2.1 European Backhaul 2
2.1.1 Company Backhaul requirements 3
2.1.2 GTS Backhaul Requirements 3
2.1.3 Overall Backhaul Network Design 4
2.1.3.1 Company backhaul design 5
2.1.4 Migrations & Upgrades 6
2.2 US Backhaul Element 6
2.2.1 Company Backhaul requirements 7
2.2.2 GTS Backhaul Requirements 7
2.2.3 US Backhaul Network Design 7
2.2.4 Migrations & Upgrades 8
3. Space requirements 8
3.1 Telecom equipment 8
3.2 Power/auxiliary equipment 9
4. Route requirements 9
4.1 Number of fibres 9
4.2 Type of fibres 9
4.3 Amplifier Spacing 10
2
1 Introduction
This specification deals with the Backhaul Elements in Europe and the US which
are to be established in relation to the agreement on the transatlantic cable
system. This document sets out the preliminary agreement between GTS and the
Company on the technical specification for the Backhaul Elements of the System.
Both parties acknowledge that further details have to be worked out in order to
finalise the technical specification.
In anticipation of having a terabit system in operation on each of the submarine
cables, the backhaul networks will have a sufficient capacity to offer the
required bandwidth for the Company.
The European backhaul network will constitute a ring, covering the landing sites
on the coasts of England and France and the sites in London and Paris. It is
foreseen that London and Paris are the breakout points.
The US backhaul network will also constitute a ring covering the North and South
landing points as well as the Terminal Points in New York 1 and New York 2/ New
Jersey 1.
2 Network Design
The Backhaul Network design consists of two parts: the European Backhaul and the
US Backhaul. For each of these two parts, a distinction has been made in the
requirements, between the Company backhaul requirements, and the GTS backhaul
requirements. An overall network design is proposed taking into account both
Company and GTS requirements expressed in Clauses 6.2 and 6.3 of the Agreement.
3
[GRAPHIC OMITTED]
Backhaul 2.1 European
The European Backhaul Element consists of the physical infrastructure
(facilities, fibre, equipment) and related services (maintenance, project
management) from the demarcation points in the Landing Stations A and B (as
indicated in Annex 1) up to, including and between the Terminal Points in London
and Paris.
The following two sections explain the specific requirements for the backhaul.
2.1.1 Company Backhaul requirements
The European Backhaul Element that is required for the Company is described
below, and consists of this minimum set of building blocks:
For the fibre infrastructure:
Link 1: Landing point A(Porthcurno) to London: 6 fibre pairs
Link 2: Landing point B(St Brieuc) to Paris: 6 fibre pairs
Link 3: London to Paris: 6 fibre pairs
Fibre type: the type of fibre required is specified in section 4.2 of this Annex
For the European Backhaul Element DWDM Terminal Multiplexes and In-Line
Amplifiers equipment on links 3, 7 and 10 of the backhaul supporting at least 40
wavelengths at STM-64 (10 Gb/s). The total number of wavelengths to be supported
by the Backhaul for the Company = 240 at STM-64 (10 Gb/s).
4
For the Space requirements:
Terminal Point Located in central London with 1,830 m(2)
Terminal Point Located in Paris with 1,500 m(2)
Optical Amplifier locations along the fibre route with 13 m(2) per location
Mid terminal locations of 79 m(2) each
Note. Above requirements are net.
2.1.2 GTS Backhaul Requirements
The additional Backhaul part required for GTS consists of the following building
blocks:
For the fibre infrastructure:
Link 1: Landing Point A to London: 1 fibre pairs
Link 2: Landing Point B to Paris: 1 fibre pairs
Link 3: London to Paris: 1 fibre pairs
Note that the above fibre requirements are included in the 6 fibre pairs
required for the FA-1 backhaul.
2.1.3 Overall Backhaul Network Design
The overall backhaul network design captures the Company Requirements and
summarises these in the following figures.
Assumptions: UK Network provider -- RACAL
London - Porthcurno 5 span design
[GRAPHIC OMITTED]
Porthcurno - London:
--------------------
o 2x5 spans
o 1 LT
o 8 ▇▇▇
France
5
Network provider -- LDCom and SAPN
London - Paris 5 span design
[GRAPHIC OMITTED]
London - Paris:
---------------
o 2x5 spans
o 1 LT
o 8 ▇▇▇
Paris - St Brieuc 5 span design
Paris - St-Brieuc:
------------------
o lx5 + 1x4 spans
o 1 LT
o 7 ▇▇▇
[GRAPHIC OMITTED]
backhaul design 2.1.3.1 Company
6
The physical design of the WDM (TM and ▇▇▇) equipment is as shown in the figures
above. It consists of two WDM sections for all three Links (3, 7 and 10) with
4-5 spans per link. This is applicable to each fibre pair.
[GRAPHIC OMITTED] Landing Point Landing Point
Link 7 Link 10 Link 3 B A Facilities
Client layer equipment: SDH or Backhaul WDM Terminal
Optical Cross Connect Equipment Fiber infrastructure Paris London
European Backhaul [GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Figure 1
2.1.4 Migrations & Upgrades
7
The migration scenario's for the European Backhaul Element is summarised below:
On completion of Phase I of the Subsea part, i.e.16 wavelengths STM-64 deployed
in two legs, the Company requires that the European Backhaul Element be able to
carry these 16 wavelengths on one fiber pair of Links 3, 7 and 10.
The European backhaul should be upgraded in line with the total capacity of the
subsea part.
2.2 US Backhaul Element
The US Backhaul Element consists of the physical infrastructure (facilities,
fibre, equipment) and related services (maintenance, project management) from
the demarcation points in the Landing Stations A and B up to, including and
between the Terminal Points in New York 1 and New York 2 / New Jersey 1.
[GRAPHIC OMITTED]
2.2.1 Company Backhaul requirements
8
The US Backhaul Element that is required for the Company is described below, and
consists of this minimum set of building blocks:
For the fibre infrastructure:
Link 1: Landing Point A to Terminal Point New York 1: 6 fibre pairs
Link 2: Landing Point B to Terminal Point New York 2 / New Jersey 1: 6 fibre
pairs
Link 3: Link in-between the Terminal Points New York 1 and New York 2 / New
Jersey 1 : 6 fibre pairs
Fibre type: the type of fibre required is specified in section 4.2 of this Annex
For the US Backhaul Element WDM Terminal Multiplexers and In-Line Amplifiers
equipment on links 1, 4 and 8 of the backhaul supporting at least 40 wavelengths
at STM-64 (10 Gb/s). The total number of wavelengths to be supported by the
Backhaul for the Company = 240 at STM-64 (10 Gb/s).
For the Space requirements:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ of 1,680 m(2)
One Terminal Point Located in Newark of 1,680 m(2)
One Optical Amplifier (located along the fibre route of Link 1) with 13 m(2)
Note. Above requirements are net.
2.2.2 GTS Backhaul Requirements
The additional backhaul part required for GTS consists of the following building
blocks:
For the fibre infrastructure:-
Link 1 - 1 fibre pairs
Link 4 - 1 fibre pairs
Link 8 - 1 fibre pairs
Note that the above fibre requirements are included in the 6 fibre pairs
required for the FA-1 bachaul
2.2.3 US Backhaul Network Design
The US backhaul network design is summarised in the following figures. The US
backhaul consists of the fibre pairs and Backhaul WDM equipment for Link 1, 4
and 8.
9
[GRAPHIC OMITTED]
New York 2 / New
Jersey 1
2.2.4 Migrations & Upgrades
The migration scenario's for the US backhaul is summarised below:
10
On completion of Phase 1 of the Subsea part, i.e.16 wavelengths STM-64 deployed
in two legs, the Company requires that the US Backhaul Element be able to carry
these 16 wavelengths on one fiber pair of Link 1.
Subsequent phases: all three links of the US backhaul are equipped with 16
wavelengths on one fibre pair.
The US backhaul should be upgraded in line with the total capacity of the subsea
part.
3 Space requirements
3.1 Telecom equipment
Each US Terminal Location (including SDH equipment): 1680 m(2)
London Terminal Location (including SDH equipment): 1830 m(2)
Paris Terminal Location (including SDH equipment): 1500 m(2)
Each Optical Amplifier Location: 13 m(2)
Each Mid Terminal Equipment: 79 m(2) (European Backhaul Element only)
Note. Above requirements are net.
0.1 Power/auxiliary equipment
DC power for transmission equipment
The power will be delivered by N=1 rectifiers supplying -48V DC to each
individual rack. Each rack will have 2 separate (A&B) redundant feeds, each feed
protected by an individual breaker. The power assumptions for the telecom are at
750W/ gross m(2) (Regenerators and Amplifier sites)
The power assumptions for the telecom are at 500W/ gross m(2) (POP sites)
AC power for auxiliary equipment
The AC power will be used for the air-conditioning, lighting, etc and has been
set at 250W/ gross
4 Route requirements
4.1 Number of fibres
11
For the final phase 240 wavelengths at 10 Gb/s have to be transported on the
Backhaul Elements that connect the submarine landing points to the cities of
London, Paris and New York / New Jersey. We assume that one DWDM system at 10
Gb/s can transport (greater than or equal to)40 X. This requires the
availability of at least 6 fibre pairs (240/40). As explained in the previous
design section, fibre pairs will be required for the specific GTS (and others)
requirements.
4.2 Type of fibres
In order to accommodate STM-64 10Gb/s data rates with the required number of
wavelengths (>= 40), ITU G.652 SSM-F (Standard Single Mode Fibre) has to be used
as a preference on all built / leased portions of the backhaul networks.
(Reference GTS R & D presentation and memorandum dated February 12th 1999 "Fibre
choice for FA-1 Backhaul Networks".
All fibres will have to show a PMD (Polarisation mode dispersion) value that
should not exceed 0.2 ps/km (1/2) (typical PMD values for newly build fibres are
less than 0.1ps/km(1/2).
4.3 Amplifier Spacing
A typical attenuation for recently installed fibres is in the range of 0.22
dB/km. The current model for the network design assumes a (less than or equal
to)70km amplifier spacing for terrestrial WDM systems with max. 20dB link span
attenuation.
12
Annex 6 - Part I
to Further Restated Shareholders Agreement
KEY COMMERCIAL TERMS FOR GTS FIBRE AND FACILITIES PURCHASE AGREEMENT
(SEE CLAUSE 7.1)
-----------------------------------------------------------------------------
Subject Terms
-----------------------------------------------------------------------------
Product GTS will purchase rights in dark fibre,
facilities and capacity on the system at cost
for *** as follows:
***
Upgrades 1. GTS will be entitled to activate its capacity
on the dark fibre pair as it requires;
2. GTS will be entitled to upgrade its
capacity on the Subsea Element by givi
prior notice to FA-1. Following
installation of the Initial Capacity
FA-1 will carry out the upgrades at
cost.
subject in both cases to the covenants of the
Project Finance documents regarding activation
of capacity.
Landing Stations Currently the four Landing Stations
are planned as Long Island (North), USA
-Porthcurno, UK --Saint Brieuc, France -- Long
Island (South), USA.
Purchase Price ***
Payment Terms See Clause 7.1 of Shareholders Agreement
O&M Charges GTS will pay the Company *** the Products listed above.
Costs may be verified independently. The Company will
undertake to run the System as economically as is
reasonably possible.
-----------------
Confidential Treatment has been requested with respect to the portions of
this agreement marked with three asterisks (***) and the redacted material
has been filed separately with the Securities and Exchange Commission.
Hand-over By the applicable RFS, the Company will
demonstrate that the System, or the first leg, as
relevant, was commissioned in accordance with a
plan that had been previously approved by the
parties. Terms for System Acceptance are:
Fibre Type Approval
The Fibre will undergo a type approval test
during which the Company will demonstrate to GTS
that it complies with a set of requirements that
will be jointly agreed upon by the parties.
WDM Type Approval
The WDM system will undergo a type approval test
during which the Company will demonstrate to GTS
that it complies with a set of requirements that
will be jointly agreed upon by the parties.
-----------------------------------------------------------
Link/Wavelength
The acceptance of a Link/Wavelength will be
mainly based on the following criteria:
o Verification of the compliance of the system interfaces
o Verification of jitter/wander performances as per ITU-T
recommendations G82 G958
o Verification of the transparency of the system to the
SDH payload
o Proper working of offered protection schemes
o Verification of the correct interfacing to GTS' NMS
o Verification of correct alarm reporting and performance
monitoring to GT NMS
o Round trip delay, according to specifications provided
by the Company
o Verification of the correct operation of ALS
o Synchronisation transparency
Trouble Free Running
A test will be performed with traffic running on
each provided wavelength for 30 consecutive days
in accordance with BER specification to be agreed
between the parties.
Term The interest will exist for the lifetime of the
System. The design criteria will require the
Subsea Element to be designed to last for 25
years.
Assignability GTS may assign the Agreement to an affiliated
company, provided such party shall remain liable
for the obligations thereunder and may assign the
Agreement to a lender as security.
***
Equipment Installation GTS will have the right to install, maintain and operate
and Connection Rights equipment (belonging to themselves or their contractors
or customers) at the Landing Stations and Pops and will
be entitled to connect the equipment to their own or
other telecommunications networks. If GTS should require
more than their allotted racks in any Landing Station or
PoP the incremental cost shall be borne by GTS such
additional space is subject to availability
Annex 6 - Part II
to Further Restated Shareholders Agreement
KEY COMMERCIAL TERMS FOR FLAG - OPTION TO PURCHASE CAPACITY
(SEE CLAUSE 7.1.(b) (A))
------------------------------------------------------------------------------
Subject Terms
------------------------------------------------------------------------------
Product FLAG will be entitled to purchase capacity in FA-1
at cost in lots (see clause 7.1(b) of Shareholders
Agreement).
Capacity FLAG will be entitled to purchase capacity on the
System as follows:
***
Landing Stations Currently the four Landing Stations are
planned as Long Island (North), USA - Porthcurno, UK
- Saint Brieuc, France - Long Island (South), USA.
Purchase Price Up to ***
Payment Terms See Clause 7.1 of Shareholders Agreement
O&M Charges FLAG will pay the Company a *** the System.
Costs may be verified independently. The Company
will undertake to run the System as economically as
is reasonably possible.
Liquidated Damages ***
Hand-over By the applicable RFS, the Company
will demonstrate that the System, or
the first leg, as relevant, was
commissioned in accordance with a
plan that had been previously
approved by the parties. Terms for
System Acceptance are:
WDM Type Approval
The WDM system will undergo a type approval
test during which the Company will demonstrate
to FLAG that it complies with a set of
requirements that will be jointly agreed upon
by the parties.
----------------------------------------------
Link/Wavelength
The acceptance of a Link/Wavelength will be
mainly based on the following criteria:
o Verification of the compliance of
the system interfaces
o Verification of jitter/wander
performances as per ITU-T
recommendations G82 G958
o Verification of the transparency
of the system to the SDH payload
o Proper working of offered
protection schemes
o Verification of the correct
interfacing to FLAG'S NMS
o Verification of correct alarm
reporting and performance
monitoring to FLAG NMS
o Round trip delay, according to
specifications provided by the
Company
o Verification of the correct
operation of ALS
o Synchronisation transparency
Trouble Free Running
A test will be performed with traffic running
on each provided wavelength for 30 consecutive
days in accordance with BER specification to
be agreed between the parties
Term The interest will exist for the
lifetime of the System. The design
criteria will require the Subsea
Element to be designed to last for 25
years.
Assignability FLAG may assign the Agreement to an affiliated
company, provided such party shall remain
liable for the obligations thereunder and may
assign the Agreement to a lender as security.
***
Equipment Installation FLAG will have the right to install,
and Connection Rights maintain and operate equipment
(belonging to themselves or their contractors
or customers) at the Landing Stations and Pops
and, subject to applicable safety and access
control procedures, will be entitled to
connect the equipment to their own or other
telecommunications networks. If FLAG should
require more than their allotted racks in any
Landing Station or PoP the incremental cost
shall be borne by FLAG, such additional space
being subject to availability.
--------------------------------------------------------------------------------