EXHIBIT 10.3
GLOBAL TELECOMMUNICATIONS OPERATIONS, INC.
CONTRACT NUMBER 1 (1996)
By and between the undersigned, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, of legal age and resident
of Santa Fe de Bogota, bearing the social security number 39'773.698, issued in
Usaquen, who acts as legal representative of GLOBAL TELECOMMUNICATIONS
OPERATIONS, INC., with the power thus invested in her and, who in this document
shall hereinafter be referred to as THE CORPORATION on the one hand; and on the
other hand SIEMENS AKTIENGESELLSCHAFT established and extant COMPANY in
accordance with the laws of the Federal Republic of Germany, established in
Berlin, and Munich, represented by SIEMENS CORPORATION, registered and licenced
at the Commercial Register of the Chamber of Commerce of Bogota, in accordance
with the Registration Number 003.206, represented in this transaction by OTLAND
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ ▇▇▇▇▇ DEL ▇▇▇▇▇▇, of legal age, residents of the
city of Santa Fe de Bogota, bearing the social security number 17'023.898 and
social security number 19'182.384, respectively, both issued in Bogota, firm
established in Santa Fe de Bogota, all of which is demonstrated in the
Certificate of Commercial and Sole Agency, issued by the Chamber of Commerce of
Bogota, who shall hereinafter be referred to as THE CONTRACTOR, this contract
has been made, consisting of the following clauses:..................
FIRST CLAUSE. PURPOSE: THE CONTRACTOR agrees to transfer in the capacity of
contract of sale to THE CORPORATION EWSD commutation equipment for a total of
40,716 telephone lines, distributed in two (2) new central moulds, in ten (10)
new remote concentradores and one pre-existent, supply equipment, tools, spare
parts, consumer materials, software for the above-mentioned lines, the SDH
synchronous transport systems for Palmira, Yumbo and Jamundi, and the necessary
materials for expansion, replacement, cabling or external plant transfer for a
total of 71,350 pairs for the three areas, as well as the necessary materials
for the construction of a linkage grid, between the central and remote
concentradores, all of the above in accordance with that which is determined in
the Technical Appendix.-----------------------------------------
PARAGRAPH: For the purposes of interpretation of technical aspects of this
document, the Technical Appendix shall take precedence over this
contract.--------------------------------
SECOND CLAUSE. CONTRACT DOCUMENTS: The Technical Appendix shall form a part of
this contract. The said Appendix includes, among others, and each in its own
right, the following aspects: A) General summary of prices. B) List of
Materials. C) Description of Services. D) Delivery Schedule. E) Diagrams. F)
Readjustment formulas for future purchases. G) Training and education. H)
Protocol of tests of approval for the partial reception and for the definitive
reception. I) Technical specifications and characteristics of the goods and
equipment.--------------------------------------------------------
TRANSITIONAL PARAGRAPH: The parties declare that the Technical Appendix attached
to this contract is that which was prepared by THE CONTRACTOR who is in the
process of reviewing said Appendix in connection with the observations presented
by THE CORPORATION or its leaseholders. Therefore THE CONTRACTOR shall be
conceded a period of fifteen (15) days to present her observations, that when
received by THE CORPORATION or its leaseholders, shall be discussed within the
five (5) following days and if said observations are found reasonable, the
Technical Appendix shall be corrected accordingly. If THE CONTRACTOR fails to
respond with respect to said observations within the fifteen (15) days herein
conceded it shall be understood that the observations concerning the Technical
Appendix are agreed to.--------------------
THIRD CLAUSE. VALUE OF THE CONTRACT: 1) The value of the CIP importation
supplies described in the Technical Appendix of this contract is TWENTY MILLION
SEVENTEEN HUNDRED THOUSAND NINE HUNDRED FORTY SEVEN AND 30/100 UNITED STATES
DOLLARS (US$2O,017,947.30). The insurance and transportation costs in Colombia
of the imported goods shall be paid by THE CORPORATION or its leaseholders. THE
CORPORATION or its leaseholders shall assume and directly pay the tariff, the
IVA and all other nationalization costs in Colombia, including that of the
certification company selected. THE CONTRACTOR shall assume responsibility for
all direct and indirect taxes, duties and any rates prevailing at the date of
ratification of this contract that encumber THE CONTRACTOR.---------------------
FOURTH CLAUSE. FORM OF PAYMENT: THE CORPORATION shall pay THE CONTRACTOR the
costs stipulated in the Third Clause in the following manner 1.) The sum of
THREE MILLION TWO THOUSAND SIX HUNDRED NINETY TWO AND 09/100 UNITED STATES
DOLLARS (US$3,002,692.09) as advance payment, which is the equivalent of fifteen
percent (15%) of the CIP value of the imported goods, within the thirty days
following the signing of this contract, once respective importation
inspections have been approved (if applicable), payable by way of direct deposit
to the order of SIEMENS AKTIENGESELLSCHAFT Depto ▇▇▇ ▇▇ 73 in Munich Federal
Republic of Germany. 2.) Eighty five percent (85%) of the value of each partial
delivery of equipment in working order, by means of dealer financing in
accordance with the following conditions: A) FINANCING BACKER: SIEMENS
AKTIENGESELLSCHAFT. B) CREDIT TERM: 10 years beginning from each date of partial
receipt of the equipment in working order. C) GRACE PERIOD: Six (6) months
starting on each date of partial delivery of the equipment in working order. D)
REDEMPTION TERMS: Eighty five percent (85%) of the total value of each partial
delivery of the equipment in working order shall be paid in 20 biannual
installments, equal and consecutive. The first installment shall be due six (6)
months after each date of partial receipt of the equipment in working order. E)
FINANCING INTEREST: Upon adverse balances an interest rate shall be applied
equal to that of the Libor rate plus 1% a year, calculated starting from the
date of CIP dispatch, payable together with each installment of capital. F)
GUARANTEES: 1. Promissory notes or bills of exchange duly signed jointly and
mutually by TELEPALMIRA S.A. E.S.P., TELEYUMBO S.A. E.S.P. AND TELEJAMUNDI S.A.
E.S.P. to the order of THE CONTRACTOR. 2. Pledging to the order of THE
CONTRACTOR of the revenue of TRANSTEL S.A. in TELEPALMIRA S.A. E.S.P.,, in
accordance with the pledging contract, whose terms and conditions shall be
established separately, and which shall be subject to the following conditions:
A. Pledging in possession of the creditor. B. In the event of non-fulfillment on
the part of the Debtor, the Pledging Creditor shall be invested with the power
to exercise the
rights of share holder that correspond to the Debter in TELEPALMIRA S.A. E.S.P.
C. The Creditor shall be able, after one hundred twenty (120) days of delay, to
collect the pledge. 3. Pledging to the order of THE CONTRACTOR of the revenue of
TELEPALMIRA S.A. E.S.P., as follows: A. Sixty thousand dollars ($US60,000) every
thirty days beginning the thirtieth (30) of October, 1996; and so on until the
thirtieth of December of the same year. Beginning January 1st, 1997 fifty
percent (50%) shall be pledged of the connection rights generated by the sale of
the ten thousand five hundred (10,500) lines supplied by THE CONTRACTOR, by
means of this CONTRACT and that shall be installed in Palmira. This pledging
shall ensure that by the 31st of October, 1997, there exist a reserve able to
cover two (2) installments of capital, plus interest, funds that shall be
utilized as source of payment and simultaneously as guarantee of the same, such
that the minimum total sum in this fund shall be the equivalent of one
installment. B) Beginning October 1st, 1997, THE CORPORATION shall pledge the
sum of one hundred seventy dollars (US$170,000) a month from the operational
revenue for the purpose of guaranteeing the reserve that allows coverage of at
least two (2) installments of capital plus interest. This procedure shall be
implemented until the total payment of the debt. In any event, the maximum value
to pledge shall be up to the sum of TWO MILLION UNITED STATES DOLLARS
(US$2,000,000.00).-FIRST PARAGRAPH: DELAYED INTEREST PAYMENTS: In the event of
delay in the payment of capital in the foreign exchange markets referred to in
numbers 1 and/or 2 of this clause, in connection with the total amount in
default THE CORPORATION shall acknowledge and pay SIEMENS AKTIENGESELLSCHAFT, in
dollars and upon the
presentation of the respective liquidation, the interests in default at the rate
equal to that referred to in this clause, number 2e, with an increase of two
percent (2%), calculated from the payment date of the sum in default, until the
date in which said sum has been credited to the bank account of SIEMENS
AKTIENGESELLSCHAFT.-------------------------------------------------------------
SECOND PARAGRAPH: THE CONTRACTOR states that she has presented the petition for
coverage of the exported goods plus fifteen percent (15%) of the value of the
imported goods which partially covers the value of the supplies and
local/domestic repairs, through the national company of the Federal Republic of
Germany, referred to as "HERMES". In the event that above-mentioned institution
denies approval of said petition, the guarantees stipulated in Letter f) of the
Fourth Clause shall continue to prevail, on the contrary, that is if HERMES
grants said approval, the guarantees referred to in Letter f) under numbers 2
and 3 shall be declared null and void.-------------
FIFTH CLAUSE. DELIVERY TIME: THE CONTRACTOR agrees to deliver, all of the
equipment and materials that compose the internal plant including its
installation and being brought into operation, properly connected and in
operation in accordance with the timetable in the Technical Appendix, if and
when the advances have been received within the time period referred to in the
Fourth Clause and the importation license duly approved, if applicable. For
each delivery, the tests referred to in the Technical Appendix shall be carried
out and only when the results shown correspond to at least those indicated in
the said document a formal statement of definitive delivery of goods in
operation shall be drawn up that shall be signed by the representatives of the
participating parties that have been authorized in due form in writing for said
event. If the agreed upon results are not shown THE CONTRACTOR agrees to adopt
at her own risk and expense all necessary measures to be able to proceed with a
new set of tests within the period of time agreed upon among the participants in
the failed tests and that shall not imply an extension of the term stipulated
and included in the Technical Appendix. The transactions of Definitive Receipt
shall serve as the foundation for the causation of payments of the total amount
stipulated under the clause pertaining to the form of payment.------------------
------------------------------------------- SIXTH CLAUSE.
EXTENSION OF DELIVERY DATE: The specified time periods and other obligations
referred to in this contract, shall be extended if the causes arise from force
majeure or by chance, and if said causes are duly proven. In these cases, new
time periods and obligations shall be indicated by mutual agreement, if and when
the party encumbered by the occurrences caused by force majeure or by chance
demonstrates this to the other party and notifies said party within three (3)
days following the date when notification and proof are possible. The extension
herein provided for in no event shall replace the term that the conditions of
force majeure and chance occurrence impeded to the party that claims to fulfill
their obligations or, in the event that a specified time period expires during
the course of the occurrences, during the time passed between the date the
occurrences began and that in which the obligation should have been complied
with.----------------------------------------------------------
SEVENTH CLAUSE. TRADEMARKS AND PATENTS: THE CONTRACTOR guarantees THE
CORPORATION the use of the trademarks and patents of the
equipment, materials and elements she has agreed to supply. THE CONTRACTOR
agrees to defend, at her own expense, at any trial initiated against THE
CORPORATION, for the wrongful use of registered trademarks and patents and shall
pay the penalties and expenses arising from such trials. If in the course of one
of these lawsuits THE CORPORATION is judicially or administratively instructed
to suspend use of one or more of the goods referred to herein, THE CONTRACTOR
agrees to (A) guarantee to the third party its financial losses, as much as
possible given the respective procedure, such that THE CORPORATION may continue
using the goods without having resolved the issue of continuity or (B) in the
event that the aforementioned proves judicially impossible, to supply him,
within five (5) days after the order of cessation is issued, with replacement
goods of similar characteristics or to make corrections in the goods, within the
same period of five (5) days, that eliminate the infraction without harming its
technical or performance characteristics. In both cases THE CORPORATION should
be able to guarantee the continuity of public home telecommunication
service.----------------------------------------------------------------------
EIGHTH CLAUSE. SCOPE OF THE GUARANTEE OF TECHNICAL QUALITY: The equipment THE
CONTRACTOR shall supply to THE CORPORATION shall be new and of the best quality
and shall be manufactured in a manner which ensures their resistance to the
climate and the meteorological conditions of the places they are be installed.
In the event of errors, including those arising from installation, THE
CONTRACTOR shall be held responsible, to the exclusion of all other claims, in
the following manner: -All parts that within one (1) year, from the date of the
last partial
definitive delivery of equipment in operation, that result unusable or which
have been damaged due to defective construction, deficient materials or faulty
manufacturing shall be supplied or repaired free of charge, if and when the
maintenance during the warranty period was carried out in a satisfactory manner.
THE CONTRACTOR must be officially notified of the existence of said defects
within a maximum period of fifteen (15) days from the day in which the defects
become known to the leaseholders of THE CORPORATION, that is, TELEPALMIRA S.A.
E.S.P., TELEYUMBO S.A. E.S.P. AND TELEJAMUNDI S.S. E.S.P. -The parts replaced in
accordance with the aforementioned literal, shall become the property of THE
CONTRACTOR. -The warranty shall not cover aging, natural wear due to mechanical
causes, nor shall it cover imperfections as a result of inappropriate or
negligent handling, or as a result of the use of inappropriate servicing
materials, such as defective repairs in the buildings, chemical and
electrochemical factors originating from natural causes and not by fault of THE
CONTRACTOR. -The warranty of the equipment implies the reparation or replacement
of said equipment whenever necessary for its normal operation, however said
obligation automatically expires after one (1) year, from the delivery date of
goods in operation. -This guarantee of quality shall not cover the existing
equipment at TELEPALMIRA S.A. E.S.P. and that are not referred to herein.
--------------------------------
NINTH CLAUSE. GUARANTEES: THE CONTRACTOR shall establish guarantees for THE
CORPORATION and TELEPALMIRA S.A. E.S.P., TELEYUMBO S.A. E.S.P. AND TELEJAMUNDI
S.A. E.S.P., issued by a Bank or Insurance Company legally authorized to
function in Colombia, and which shall be founded upon the value of the
contact that shall guarantee the compliance with the obligations referred to
herein, as: (A) Full compliance with this contract including penalties in the
amount of 10% of said contract and that shall prevail for the duration of its
term plus three (3) months. (B) The quality and proper working order of the
goods supplied in the amount of ten percent (10%) of the value of the imported
goods referred to herein and which shall be valid for one (1) year from the
definitive partial receipt of the goods in operation. The warranties referred to
in the Literals a) and b) shall be established and presented to THE CORPORATION
and their leaseholders by THE CONTRACTOR along with the proof of payment of the
premium within the five (5) days following the date of ratification of this
contract. The warranty referred to in literal b) shall be established in each of
the dates of definitive partial receipt of the goods in operation.--------------
TENTH CLAUSE. REPLENISHMENT OF WARRANTY: THE CONTRACTOR agrees to replenish
the total amount of the warranty whenever due to fines imposed on said warranty
it should diminish or be depleted.----------------------------------------------
ELEVENTH CLAUSE. FINES: THE CONTRACTOR agrees to pay THE CORPORATION penalties
or fines imposed due to delayed payment, a sum in the amount of one tenth of one
percent (.1%) of the value of the supplies or goods not delivered within the
stipulated time period, for each day of delay, without the value of the fines
imposed exceeding ten percent (10%) of the total value of the contract. The
fines shall be imposed through written notification, duly provided by THE
CORPORATION or its leaseholders. THE CONTRACTOR shall be able to present its
disclaimers within the five (5) calendar days following the date of receipt of
the above-
mentioned notification. THE CORPORATION or its leaseholders shall answer for the
disclaimers within five (5) calendar days. In the event of confirmation of said
fine, and if THE CONTRACTOR insists on its disclaimers, it shall have recourse
to the Committing Clause referred to in the Fourteenth Clause within the five
(5) days following said confirmation.-------------------------------------------
PARAGRAPH: Once the fine is confirmed, THE CORPORATION shall be authorized to
deduct the value of said fine, from the sum owed to THE CONTRACTOR, as well as
the resulting interest at a three percent (3%) monthly rate, from the date of
imposition of the fine on the part of THE CORPORATION.--------------------------
TWELFTH CLAUSE. REGISTERED OFFICE AND APPLICABLE LAW: For all legal purposes,
New York shall be the contractual site. This contract shall be subject to the
laws of the United States and any controversy that arises shall be referred to
United States judges.-----------------------------------------------------------
THIRTEENTH CLAUSE. CONFIDENTIALITY: This contract as well as all information
furnished by THE CORPORATION and its leaseholders to THE CONTRACTOR concerning
the project for the duration of the negotiations as well as the information
provided in the fulfillment of the contract shall be maintained by THE
CONTRACTOR in the strictest confidence, and said party shall be obligated to
maintain the same secrecy as with its commercial secrets and privileged
information. At the termination of the contract THE CONTRACTOR agrees to return
the information received to THE CORPORATION or its leaseholders or to destroy
said information and present proof of destruction signed by the fiscal
investigator.--------------------------------------------------------
FOURTEENTH CLAUSE. RESOLUTION OF DIFFERENCES: Any conflict that arises between
the parties with respect to the making, executing, interpretation or termination
of this contract shall be subject to the following procedure: A) When the
conflict is known and within ten (10) days following this either party may
solicit in writing from the other party that, within a time period of no more
than five (5) days from the notification, the legal representatives of each
party meet and endeavor to find a solution; and B) If the legal representatives
fail to reach an agreement within the twenty (20) following days or they fail to
meet within the five (5) days indicated in the previous literal, the dispute
shall be subject to the decision of an arbitration court in accordance with the
laws of the United States, which shall dictate its finding in law and shall be
subject, with respect to their implementation, to the laws of said Court where,
they shall also have their headquarters.----------------------------------------
FIFTEENTH CLAUSE. FUTURE PURCHASES AND SPARE PARTS: THE CONTRACTOR guarantees
to THE CORPORATION the due supply of spare parts and materials required for the
operation and maintenance of the goods supplied for the duration of ten (10)
years from the date of definitive receipt. Also, THE CONTRACTOR agrees to
comply with requests for future purchases of equipment and software that THE
CORPORATION or its leaseholders present and shall offer these at the lowest
price between A) the unitary prices referred to in the Technical Appendix of
this contract readjusted in accordance with the readjustment formula included in
the Technical Appendix, and B) the prevailing listed price on the date of the
purchase order.-----------------------------------------------------------------
SIXTEENTH CLAUSE. SOLIDARITY: To the end of counter-guaranteeing the
obligations of GLOBAL TELECOMMUNICATIONS OPERATIONS INC., referred to herein,
the corporations TELEPALMIRA S.A. E.S.P., TELEYUMBO S.A. E.S.P., TELEJAMUNDI
S.A. E.S.P. AND TRANSTEL S.A., are mutually bound in said obligations under the
responsibility of GLOBAL TELECOMMUNICATIONS OPERATIONS INC.---------------------
As proof the signing takes place in the city of Panama, the second (2nd) of May
in the year nineteen ninety six (1996).
GLOBAL TELECOMMUNICATIONS OPERATIONS, INC.
______________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ VESGA
SPECIAL ATTORNEY
TELEPALMIRA S.A. E.S.P.
_______________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ M.
GENERAL MANAGER
C.C. 10.074.883 OF ▇▇▇▇▇▇▇
TELEYUMBO S.A. E.S.P.
_________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ O.
GENERAL MANAGER
C.C. 7.506.436 OF ARMENIA
TELEJAMUNDI S.A. E.S.P.
_____________________
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ E.
GENERAL MANAGER
C.C. 16.616.481 OF CALI
TRANSTEL S.A.
________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ E/
PRESIDENT
C.C. 16.614.481 OF CALI
SIEMENS AKTIENGESELLSCHAFT
REPRESENTED BY
SIEMENS COMPANY LIMITED
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ DEL ▇▇▇▇▇▇
SPECIAL ATTORNEY DEPUTY VICE PRESIDENT
OF TELECOMMUNICATIONS
C.C. 17023898 OF BOGOTA C.C. 19182381