EXECUTION VERSION
Exhibit 99.2
NETWORK ALLIANCE AGREEMENT
BETWEEN
FLAG TELECOM IRELAND NETWORK LIMITED
AND
VERIZON GLOBAL SOLUTIONS HOLDINGS II LTD.
NETWORK ALLIANCE AGREEMENT
This Network Alliance Agreement ("AGREEMENT") is entered into as of April
3, 2001, between FLAG Telecom Ireland Network Limited ("FTINL" and, together
with FLAG Telecom Holdings Limited and all directly or indirectly wholly-owned
subsidiaries of FLAG Telecom Holdings Limited, and any other Affiliates (as
defined below) added pursuant to Section 1.2 below, "FLAG"), a company limited
by shares organized under the laws of Ireland with its registered office located
at 0 Xxxxxxxxxxx Xxxxxx, Xxxxxx 0, Xxxxxxx, and Verizon Global Solutions
Holdings II Ltd. ("VGSL" and, together with its Affiliates, "VGS"), a company
organized under the laws of Bermuda with its registered office located at 00
Xxxxx Xxxxxx, Xxxxxxxx XX 12, Bermuda. Hereinafter, FTINL and VGSL may be
referred to together as "PARTIES", and individually as a "PARTY".
WHEREAS:
A. VGS wishes to establish, own and operate a European backbone network (the
"VGSIEN") with sufficient capacity and geographic scope to enable both VGS (and
its Affiliates) and FLAG to provide end-to-end provisioning of network services
to their respective customers and to market such service offerings under their
separate, proprietary brands.
B. FLAG has spent considerable time in the planning of extensions to its
existing network.
C. VGS and FLAG desire to create a network alliance to participate in the
establishment and use of the VGSIEN (the "ALLIANCE"). The initial scope of the
VGSIEN is that set out in Exhibit C and may be expanded in accordance with the
terms of this Agreement.
D. As part of the Alliance, VGS desires to provide transport and related
telecommunications services to FLAG to support the services that FLAG offers to
their customers.
In consideration of the premises recited above and of the mutual promises
and undertakings set forth in this Agreement, and intending to be legally bound,
the Parties hereby agree as follows:
1. SERVICES; FORECASTS; SERVICE ORDERS
1.1 The services which VGS will make available through the VGSIEN (the
"SERVICES") are set forth in Exhibit B hereto, which is incorporated
by reference and which may be amended from time to time in order to
add additional Services by mutual agreement of the Parties.
1.2 VGS shall provide Services under the terms of this Agreement to FLAG
Telecom Holdings Limited and any directly or indirectly wholly owned
subsidiary of FLAG Telecom Holdings Limited, as well as to such other
Affiliates of FTINL as FTINL may request, and VGSL in its sole
discretion shall agree to in writing. VGSL may provide the Services
through one or more operating Affiliates. As used herein, an
"AFFILIATE" of any company shall mean another company which controls,
is controlled by, or is under common control with such company. FTINL
shall be responsible for all orders placed by any member of FLAG, and
shall be liable to VGSL for all amounts due hereunder with respect to
any Services provided to any member of FLAG as well as for performance
by all members of FLAG of all of their respective obligations
hereunder. FTINL shall be bound by any action taken pursuant to or in
connection with this Agreement by any member of FLAG. VGSL shall be
responsible for all Services provided by any member of VGS. VGSL shall
be bound by any action taken pursuant to or in connection with this
Agreement by any member of VGS. The Purchase Commitments (as defined
in Section 1.4) shall be determined on an aggregate basis for FLAG,
and any Service provided to any member of FLAG shall be counted toward
the applicable Purchase Commitment for such order, with VGSL having no
responsibility to allocate such Purchase Commitment among the members
of FLAG except as provided in Section 3. FLAG may purchase and use the
Services only for purposes of providing bundled end-to-end services to
end-users, and are strictly prohibited from reselling any Service
unless bundled with other products or services provided by FLAG or
other suppliers.
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1.3 Not later than October 1 of each calendar year, FTINL shall provide
VGSL with a good faith forecast of FLAG's projected need for Services
in each of the following three calendar years, which forecast shall be
in such form as shall be mutually agreed upon by FTINL and VGSL and
shall indicate, for each Service, the aggregate quantity of such
Service forecasted for each individual designated PoP pair on the
VGSIEN (a "ROUTE") for each calendar quarter. The forecast for the
balance of 2001 (the "INITIAL FORECAST") is attached to this Agreement
as Exhibit A and is accepted as to 2001. FTINL shall have the right to
amend Exhibit A, not later than March 30, 2001, to provide for
purchase of different Services (within each category of Service) of
equivalent value. If VGSL believes that the VGSIEN will be unable to
provide any part of the Services (for any Route, for any period) shown
on any forecast (except for the Initial Forecast), it shall so notify
FTINL, and the Parties shall discuss the matter in good faith with the
objective of satisfying FLAG's forecast. The forecast shall be reduced
or the timing of activation of Services adjusted, as the case may be,
by the amounts VGSL believes cannot reasonably be provided by the
VGSIEN, or by such other amounts as may be agreed in writing by the
Parties not later than 30 days after the date the forecast was
provided to VGSL. Each such forecast, as so reduced or adjusted if
applicable, shall be referred to herein as a "FORECAST" (which term
includes the Initial Forecast).
1.4 FLAG's initial purchase hereunder (the "INITIAL PURCHASE") shall be as
set forth in Exhibit D. Upon finalization (which for purposes of this
Agreement shall be deemed to have occurred 30 days after submission of
a forecast by FTINL) of the Forecast in each year, FLAG shall make a
further purchase hereunder (the "INCREMENTAL PURCHASE") equal to the
aggregate IRU Prices (as defined in Exhibit B) for the Aggregate
Purchase Commitment (as defined below) for the following calendar
year. The "AGGREGATE PURCHASE COMMITMENT" shall be equal to the sum of
the Purchase Commitments for each Service on each Route. The "PURCHASE
COMMITMENT" for each Service
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on each Route for any calendar year shall be equal to [*]% of the
incremental quantity of Service on such Route shown on the Forecast
submitted in the year preceding such calendar year.
1.5 FLAG shall have the right to purchase additional Services on any Route
in any calendar quarter, in addition to the Initial Purchase and/or
Incremental Purchase for the applicable year, up to 100% of the amount
of Service forecasted for such Route for such calendar quarter in the
current Forecast for such year. In the event FLAG wishes to purchase
such additional services, FLAG shall make such request in writing to
VGSL, and VGSL shall advise FLAG of the date on which such Services
will be ready for service. In the event FLAG wishes to purchase
additional Services beyond such 100% level, FLAG shall make such
request in writing to VGSL, and VGSL, within 30 days after such
request, shall notify FLAG whether, to what extent, for what price and
on what date it is willing to provide such Services. FLAG shall either
accept or decline such offer within 15 days after receiving it from
VGSL.
1.6 All Services purchased hereunder shall be purchased and provided on an
indefeasible right of use ("IRU") basis. For purposes of this
Agreement, an "IRU" shall mean an exclusive, irrevocable and
non-transferable right to use a Service for a period of fifteen (15)
years from activation (or such other period of time as may be mutually
agreed between the Parties) that is vested in FLAG but which will not
include the right to control any Service-related facilities nor any
right to salvage value upon decommissioning of any such facilities.
1.7 Orders for Services shall be transmitted by FLAG, and processed by
VGSL, in accordance with VGSL's then-current, standard order
procedures and guidelines as notified to FTINL in writing (as such
procedures and guidelines may be modified from time to time by VGSL
upon reasonable prior written notice to FTINL). Services shown in any
calendar quarter of any Forecast, to
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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the extent such Services are contained in the associated Purchase
Commitment, shall be ready for service on the first day of such
calendar quarter, except that Services shown in the second quarter of
2001 in the Initial Forecast may not be ready for service until the
end of such quarter.
2. TERM OF THE AGREEMENT
2.1 This Agreement is effective and the Parties' obligations shall
commence upon the date first set forth above ("EFFECTIVE DATE"). This
Agreement shall continue in effect for a period of five years from the
Effective Date ("INITIAL TERM"), unless (and then only to the extent)
terminated earlier in accordance with Section 5.
2.2 Upon expiration of the Initial Term, this Agreement shall continue
from year to year unless and until (i) this Agreement is terminated by
one Party giving the other Party 180 days' written notice of
termination, with the earliest date for such notice being 180 days
prior to the expiration of the Initial Term, or (ii) this Agreement is
terminated pursuant to Section 5 (and then only to the extent so
terminated).
2.3 The Parties acknowledge and agree that except with respect to a
termination of this Agreement pursuant to Sections 5.2, 5.3, 5.4 or
5.5, no termination of this Agreement will terminate or otherwise
affect any Services theretofore purchased on an IRU basis, meaning
that FLAG shall continue to have the right to use such Services and
shall continue to pay O&M Charges (as defined in Exhibit B) relating
to such Services. Any Party terminating this Agreement in whole or in
part pursuant to Sections 5.2, 5.3, 5.4 or 5.5 shall have the right,
by notice to the other Party, to terminate any or all Services which
were theretofore purchased on an IRU basis, in which case FLAG shall
have no further right to use such Service and FLAG shall not be
entitled to any refund of any part of the initial payment made for
such IRU except as set forth in the last sentence of this Section 2.3.
FLAG, however, will continue to be obligated to pay O&M Charges
relating to such Services except (a) with respect to any
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Services terminated pursuant to Section 5.5, as to which such
obligation will cease as of the effective date of the termination, and
(b) with respect to any Services actually resold by VGSL, as to which
such obligation will cease as described in the next sentence. If any
Service is so terminated, VGSL will use commercially reasonable
efforts to resell any such Service which FLAG had purchased on an IRU
basis, and if VGSL does resell such Service, such IRU will be
terminated (but except as described in the next sentence, no part of
the initial payment made therefor shall be refundable) and FLAG will
be released from its obligation to pay O&M Charges relating to such
Service from and after the effective date of the resale. If VGSL
actually resells any Service on an IRU basis following a termination
pursuant to Section 5.5, VGSL shall, upon receipt of payment for such
resale, make a payment to FTINL (or to such other FLAG entity as may
be specified by FTINL in writing) equal to (a) the payment so
received, times (b) the number of years remaining in the IRU term for
such Service under FLAG's IRU (i.e., 15 less the number of years
elapsed since such Service was placed in service hereunder), divided
by (c) the number of years in the term of the IRU in such resale;
provided that such payment shall in no event be greater than the
proportionate part of the IRU Price paid by FLAG for such Service
applicable to the remaining term of FLAG's IRU for such Service.
2.4 If FLAG determines that it has Service purchased on an IRU basis for a
given Route which it is not using or which it will not need in the
future (the "EXCESS IRU SERVICE"), and has a need for additional
Service on another Route (the "NEW IRU SERVICE"), FLAG may so notify
VGSL and request a termination of the Excess IRU Service in exchange
for purchase of the New IRU Service. If VGSL has capacity available,
or is able through commercially reasonable efforts to obtain capacity,
to provide the New IRU Service, then it will permit FLAG to terminate
the Excess IRU Service in exchange for purchase of the New IRU
Service. The foregoing notwithstanding, VGSL shall have no obligation
to permit any such exchange (x) with respect to Service on a Route
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which was implemented at the request of FLAG and is not being used by
any other customer of VGSL other than FLAG, or (y) to the extent that
the Excess IRU Price (as defined below) of such Excess IRU Service,
when aggregated with the Excess IRU Prices of all other Excess IRU
Services theretofore exchanged, exceeds [*]% of the total price
theretofore paid by FLAG for Services under this Agreement. The IRU
term for the New IRU Service shall be equal to the remaining term of
the Excess IRU Service. The purchase price for the New IRU Service
shall be equal to the sum of (a) the amount (if any) by which the New
IRU Price (as defined below) exceeds the Excess IRU Price (as defined
below), plus (b) all costs and expenses incurred by VGSL to plan and
implement the exchange of Services, plus a margin of [*]% on such
costs and expenses, plus (c) a rearrangement fee, calculated at the
rate of [*]% per annum of the Excess IRU Price, payable monthly for
each month through and including the earlier of (i) the month in which
VGSL resells the Excess IRU Service and (ii) the twelfth month after
the effective date of the exchange. For exchanges made during the
Initial Term, the total rearrangement fees paid pursuant to clause (c)
above shall be limited to $[*]. The "NEW IRU PRICE", as to any New IRU
Service, shall be the amount VGSL would have charged for such Service
on such Route on an IRU basis at the time the Excess IRU Service was
purchased (prorated to reflect the elapsed term of the Excess IRU
Service). The "EXCESS IRU PRICE" shall be that portion of the initial
purchase price for the IRU of which the Excess IRU Service is a part
which is allocable to the Excess IRU Service, and shall be equal to
the initial purchase price for such IRU prorated to reflect both the
capacity of such IRU being retained by FLAG and the elapsed term of
such IRU. VGSL shall make commercially reasonable efforts to resell
any exchanged Excess IRU Service. If the New IRU Price is less than
the Excess IRU Price, the difference shall be carried forward as a
credit usable by FLAG solely toward the purchase price for any
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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subsequent exchanges for New IRU Services, provided that such credit
shall automatically be amortized to zero over the remaining term of
the Excess IRU.
2.5 The obligations of the Parties to each other under this Agreement are
conditional upon VGS and FLAG entering into the Resale and Purchase
Agreement (Dark Fibre and Co-location Facilities) dated as of April 3,
2001, which provides for acquisition by VGS of certain dark fiber
capacity and licensing by VGS of certain collocation space from FLAG
to the aggregate value of at least $[*] which FLAG has acquired and
licensed respectively from KPNQwest Services UK Limited.
3. BILLING AND PAYMENT; RATES AND CHARGES; TAXES AND ASSESSMENTS
3.1 The IRU Price and O&M Charge (both as defined in Exhibit B) for the
Services set forth in the Initial Forecast (and for the Initial
Purchase) are set forth in Exhibit D. The IRU Prices and O&M Charges
for the Services ordered pursuant to Incremental Purchases shall be
determined as set forth in Exhibit B.
3.2 VGS shall invoice ("INVOICE") such entity as shall be designated by
FTINL with respect to each Service (the "BILLED ENTITY") as set forth
in this Section. VGS shall Invoice the Billed Entity:
(a) Promptly after the date of this Agreement, for the amount of the
Initial Purchase;
(b) At the beginning of each calendar quarter (or as soon as
practicable thereafter), for the amount of Services called for to
be provided in the next following calendar quarter under the
Incremental Purchase;
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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(c) Monthly, for (i) the IRU Price of any new Service placed in
service in such month which was not included in an Incremental
Purchase payment, (ii) the O&M Charge for the balance of such
calendar quarter for any Service Invoiced in such month pursuant
to clause (c)(i), (iii) any costs incurred during such month for
any FLAG-specific development work in the BSS or network OSS
Architecture, plus [*]% margin, and (iv) any other costs incurred
in such month which are chargeable to FLAG in accordance with
Exhibit B, plus [*]% margin; and
(d) On the first day of each calendar quarter, for the O&M Charges
for such quarter for each Service then in service or being placed
in service as of the start of such quarter.
3.3 Each Invoice shall be paid by the Billed Entity by wire transfer, made
pursuant to the instructions set forth below, in immediately available
U.S. funds, so that the payment is received by VGS not later than the
date (the "DUE DATE") which is 30 calendar days from the date of the
Invoice; provided, however, that the Due Date for payment of the
amount of the Initial Purchase shall be the date on which VGS makes
payment for the initial payment of at least $[*] under the definitive
agreement(s) referred to in Section 2.5. Subject to Section 4, any
delinquent Invoice shall bear late payment fees at the rate of 1.5%
per month (or such lower rate as may be required by law) from the Due
Date until paid.
Wire Transfer Instructions (subject to change by VGSL by not less than
10 Business Days prior notice in writing) as follows (to be advised):
BANK NAME
ADDRESS
CITY, STATE, ZIP AND COUNTRY
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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PHONE #
ABA #
FOR CREDIT TO:
ACCOUNT #
SPECIAL INSTRUCTIONS:
A "BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a day on which banks in the City of London are
permitted to remain closed.
3.4 FLAG shall be responsible for the collection and remittance of all
governmental assessments, surcharges and fees pertaining to its resale
of the Services. FLAG shall provide VGSL with, and maintain, valid and
properly executed certificates of exemption for such assessments,
surcharges and fees, as applicable. Each Party shall be responsible
for own taxes on its net income arising under this Agreement. If FLAG
or VGS is required by law to deduct or withhold any taxes from any
amounts payable under this Agreement, such amounts shall be increased
as necessary so that VGS receives an amount equal to the sum it would
have received had no such deduction or withholding been made, provided
that VGSL provides evidence (in a form reasonably satisfactory to
FTINL) that no credit is available for any amount withheld or
deducted. FLAG shall make timely payment of, the amount withheld
(before penalties attach thereto or interest accrues thereon) to the
applicable taxing authority. To the extent that the Services are
subject to Value Added Tax, VGS and FLAG shall work together in good
faith and within applicable laws such that prior to the issuance of
any invoices, any invoicing arrangements are structured so as to
facilitate FLAG's recovery of any Value Added Tax that VGS is required
to invoice to FLAG hereunder in the most expeditious manner.
4. BILLING DISPUTES
The Billed Entity shall have the affirmative obligation of providing
written notice of any dispute regarding any Invoice within 30 days after
receipt of the Invoice by the Billed Entity (which notice shall include
sufficient detail for VGS to investigate the
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dispute). The Billed Entity shall not withhold any payment except for
amounts legitimately in dispute and notified to VGSL in accordance with the
preceding sentence. If the Billed Entity does not provide timely notice of
a dispute with respect to an Invoice, the Billed Entity is deemed to have
waived its dispute rights for that Invoice and to have agreed to pay the
same. Provided the Billed Entity has provided sufficient detail for
investigation of the dispute, VGS will use reasonable efforts to resolve
and communicate its position regarding the dispute to the Billed Entity in
writing within 60 days of its receipt of the dispute notice from the Billed
Entity. In the event that the Parties are unable to resolve any such
dispute within 120 days of notice from the Billed Entity to VGSL, at the
request of either Party the dispute shall promptly be submitted to the
President, FLAG Network Services and the Group Vice President of Carrier
Sales of VGS (together, the "SENIOR OFFICERS") for resolution of the
dispute or determination of an appropriate procedure for resolving the
dispute. If the dispute is resolved in VGS's favor any amounts to be paid
by the Billed Entity shall be subject to the late payment charges under
Section 3.3 retroactive to the Due Date of the disputed Invoice.
5. TERMINATION RIGHTS
5.1 If any governmental authority or court having jurisdiction over VGS,
any part of the VGSIEN or any of the Services issues a rule,
regulation, law or order which has the effect of canceling, changing,
or superseding any material term or provision of this Agreement
(collectively, "REGULATORY REQUIREMENT"), then this Agreement shall be
deemed modified in such a way as the Parties mutually agree is
consistent with the form, intent and purpose of this Agreement and is
necessary to comply with such Regulatory Requirement. Should the
Parties not be able to agree on modifications necessary to comply with
a Regulatory Requirement within 30 days after the Regulatory
Requirement is effective, then upon written notice either Party may
terminate that portion of this Agreement impacted by the Regulatory
Requirement, or, if partial termination is not practicable or
substantially alters the fundamental terms of this Agreement,
terminate this Agreement in its entirety.
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5.2 Either Party may terminate this Agreement upon the other Party's
insolvency, dissolution or cessation of business operations.
5.3 VGSL may terminate this Agreement upon 30 days written notice to FTINL
for a Billed Entity's failure to pay any Invoice by 60 days after the
Due Date therefor (except for items being disputed in accordance with
Section 4), unless the Billed Entity pays such invoice in full during
the 30 day period.
5.4 In the event of a breach of any material term or condition of this
Agreement by a Party (other than a failure to pay a delinquent Invoice
which is covered under Section 5.3, and other than failure to meet
Service Level Agreements which is covered in Section 5.5), the other
Party may terminate this Agreement upon 60 days written notice, unless
the breaching Party cures the breach during the 60 day period or, if
such breach cannot be reasonably be cured within a 60 day period, if
the breaching Party institutes good faith efforts to cure such breach
during such 60 day period and such breach is cured within 180 days.
5.5 In the event that VGSL substantially fails to meet Service Level
Agreements for any Service in any three consecutive months, or in any
four months in any consecutive twelve-month period, and FLAG customers
representing committed revenues to FLAG of at least US$[*] for either
the current and preceding calendar year combined or the current and
next calendar year combined have notified FLAG in writing that they
intend to terminate or non-renew their service agreements with FLAG as
a result of such failures, FTINL shall have the right to terminate
this Agreement upon 60 days written notice, unless VGSL meets the
Service Level Agreements for such Service during such period (or, if
such failure cannot be reasonably be cured within a 60 day period, if
VGSL institutes good faith efforts (as approved by FTINL, which
approval shall not be unreasonably withheld) to cure such failure
during such 60 day period and such failure is cured within 120 days);
provided that if
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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VGSL fails to meet the Service Level Agreements for such Service
during any of the next three months after the end of such 60-day or
120-day period, as applicable, FTINL shall have the right to terminate
this Agreement upon 30 days written notice without giving VGSL any
further opportunity to cure. This termination right will not be
available to FTINL to the extent that the failure of a Service to
achieve the Service Level Agreements results from any event or
circumstance described in Section 10 or a breach by FTINL of its
obligations under this Agreement.
5.6 In the event that FLAG or its customer is able to obtain any new or
incremental Service on any Route from a third party at the designated
points of interconnection with the VGSIEN at a Qualifying Price (as
defined below), it may so notify VGSL (the "PRICING NOTICE"),
providing documentation of the third party's offer to provide the
Service and of the offered price for such Service. If VGSL within 10
days of receiving a Pricing Notice does not offer to reduce the charge
for such Service on such Route to the price being offered by such
third party, FTINL shall have the right to terminate its obligation
hereunder to purchase additional quantities of such Service on such
Route upon 30 days written notice, which notice must be given not
later than 90 days after the date of the Pricing Notice. A "QUALIFYING
PRICE" is an offered price which is, at the time of purchase, (a) less
than the price being charged by VGSL for such Service on such Route
under this Agreement and (b) not materially lower than (i) the average
prevailing price (excluding such offered price) for like amounts of
substantially similar capacity on such Route or (ii) if there is no
such average prevailing price, the price that would be attributable to
supply and demand factors in a competitive marketplace.
5.7 Either Party may terminate this Agreement upon 30 days written notice
to the other in the event that (i) Verizon Communications Inc. and its
controlled affiliates shall own, in the aggregate, less than 9% of the
outstanding voting shares of FLAG Telecom Holdings Limited, or (ii) a
majority of the members of FLAG Telecom Holdings Limited's board of
directors then in office shall
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have been nominated, appointed or elected by any person, or group of
persons acting in concert, other than Verizon Communications Inc. and
its controlled affiliates, or (iii) FLAG Telecom Holdings Limited
shall have sold a controlling interest in its telecom network business
or any significant portion thereof to any person, or group of persons
acting in concert, other than Verizon Communications Inc. and its
controlled affiliates. Notwithstanding a termination pursuant to this
Section 5.7, all then-existing performance and payment obligations of
the Parties relating to purchased IRUs and the associated operations
and maintenance responsibilities shall remain fully in effect.
5.8 Upon any material breach by FTINL not cured after expiration of all
applicable notice and cure periods, if any, in addition to any other
rights and remedies available to it, VGSL may at its sole option do
any or all of the following:
A. Cease accepting or processing orders for Service and suspend
Service;
B. Cease all electronically and manually generated information and
reports;
C. Terminate this Agreement, either in whole or with respect to any
or all of the Services, without liability to FTINL;
D. Pursue any other legal or equitable remedy or relief available to
it.
6. SERVICE LEVEL AGREEMENTS
Set forth in Exhibit B-3 are performance standards for each of the Services
("SERVICE LEVEL AGREEMENTS" or "SLAS"). Compliance by VGSL with each of the
Service Level Agreements shall be monitored and reported in writing to
FTINL by VGSL for each calendar month, unless a different timeframe is
agreed in writing between the Parties. Except as may otherwise be
specifically provided herein, VGSL shall exercise all reasonable efforts to
provide such written reports to FTINL by the twentieth day of the next
succeeding calendar month.
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7. ACQUISITION OF FLAG CAPACITY BY VGSIEN; EXPANSION OF THE VGSIEN
7.1 The Parties acknowledge that FLAG may from time to time have
opportunities to acquire terrestrial network capacity and/or
facilities which may be complementary to the VGSIEN. The Parties agree
to discuss in good faith the possibility of including any such
capacity and/or facilities in the VGSIEN.
7.2 The Parties agree that VGSL shall have the sole right to determine and
to implement modifications to the VGSIEN, including without
limitation, expansion of the network to interconnect additional cities
and countries, in order to meet its own needs and the needs of its
customers, including FLAG. FTINL agrees that if any member of FLAG
wishes to acquire Service on a Route within the European Union or
Switzerland where the VGSIEN does not at that time have capacity or
facilities, it will give VGSL the right to offer to provide such
Service, provided that VGSL shall have no obligation to make any such
offer and FLAG shall have no obligation to accept any such offer.
FTINL shall not, and shall procure that no other member of FLAG shall,
accept any other offer to provide such Service without considering
VGSL's offer therefor, unless VGSL has declined to offer to provide
such Service. For purposes hereof, VGSL shall be deemed to have
declined to make such offer if, after receiving a complete and final
request for proposal for such Service from FLAG, it either declines in
writing to make such an offer or it has failed to make such an offer
within 30 days (or, in the case of a complex request for proposal,
such longer period as shall be reasonable under the circumstances)
after receipt of such request.
8. INDEMNIFICATION; LIMITATION OF LIABILITY
8.1 Each Party (in each case the "INDEMNITOR") shall defend and indemnify
the other Party and its directors, officers, employees,
representatives and agents (together the "INDEMNITEES") from any and
all claims, taxes, penalties, interest, expenses, damages, lawsuits or
other liabilities (including without
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limitation, reasonable attorney fees and court costs) resulting from
(i) the failure of the Indemnitor to comply with any applicable law or
regulation as required by Section 13, (ii) knowing infringement or
misappropriation by the Indemnitor or any of its Representatives in
the performance of this Agreement of any intellectual property right
necessary for the Indemnitor's performance hereunder, or (iii) the
Indemnitor's breach, or failure to exercise reasonable care in the
performance, of this Agreement; provided, however, that VGSL shall not
be liable and shall not be obligated to indemnify FTINL, and FTINL
shall defend and indemnify VGSL hereunder, for any claims by any third
party, including end-users, with respect to services provided by FLAG
which may incorporate any of VGSL's Services except to the extent that
such claim relates to the Services provided by VGSL.
8.2 EACH PARTY'S LIABILITY IN CONNECTION WITH THIS AGREEMENT (WHETHER
BASED IN CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE),
MISREPRESENTATION, WARRANTY OR ANY OTHER LEGAL OR EQUITABLE GROUNDS),
SHALL IN ALL CASES BE LIMITED TO DIRECT DAMAGES SUFFERED BY THE OTHER
PARTY, AND THE ENTIRE AGGREGATE LIABILITY OF EACH PARTY IN CONNECTION
WITH THIS AGREEMENT, OTHER THAN LIABILITY FOR FAILURE TO PAY AMOUNTS
DUE AND OWING HEREUNDER FOR SERVICES, SHALL NOT EXCEED IN ANY CALENDAR
YEAR AN AMOUNT EQUAL TO [*] OF THE INITIAL PURCHASE. IN NO EVENT WILL
EITHER PARTY HAVE ANY LIABILITY IN CONNECTION WITH THIS AGREEMENT
(WHETHER BASED IN CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION,
NEGLIGENCE), MISREPRESENTATION, WARRANTY OR ANY OTHER LEGAL OR
EQUITABLE GROUNDS) FOR, AND EACH PARTY HEREBY WAIVES AND RELEASES ANY
CLAIMS IT MIGHT
------------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
-16-
OTHERWISE HAVE TO BE COMPENSATED BY THE OTHER IN CONNECTION WITH THIS
AGREEMENT OR OTHERWISE FOR, ANY: (A) CONSEQUENTIAL, SPECIAL,
INCIDENTAL OR INDIRECT DAMAGES (SUCH AS, WITHOUT LIMITATION, LOSS OF
REVENUE, LOSS OF PROFIT, LOSS OF DATA, LOSS OF USE, LOSS OF GOODWILL,
LOSS OF SAVINGS, INTERRUPTION OF BUSINESS OR CLAIMS OF THIRD PARTIES),
EVEN IF SUCH FIRST PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
LOSSES OR DAMAGES; OR (B) PUNITIVE OR EXEMPLARY DAMAGES.
9. RELATIONSHIP OF THE PARTIES
The Parties acknowledge and agree that the relationship between them is
solely that of independent contractors, and nothing herein shall be deemed
to constitute a partnership between the Parties nor the appointment of one
of the Parties as agent for the other. Neither Party, nor their respective
employees, agents or representatives, has any right, power or authority to
act or create any obligation, express or implied, on behalf of the other
Party.
10. FORCE MAJEURE
10.1 Other than with respect to failure to make payments due hereunder,
neither Party shall be liable under this Agreement for delays,
failures to perform, damages, losses or destruction, or malfunction of
any equipment, or any consequence thereof, caused by or due to fire,
earthquake, flood, water, the elements, third party labor disputes,
utility curtailments, power failures (provided that VGSL shall have
provided reasonable backup in relation to industry standards),
explosions, civil disturbances, governmental actions, shortages of
equipment or supplies, unavailability of transportation, acts or
omissions of third parties, or any other cause beyond its reasonable
control; provided, however, that in the event that any such event of
force majeure causes any delay or failure on the part of VGSL to
deliver any Service on any Route for a continuous period of 180 days
or more, FTINL may terminate this
-17-
Agreement as to such Service on such Route or PoP by notice to
VGS in writing effective immediately. VGSL shall give FTINL notice
promptly after it becomes aware of the occurrence of an event of the
types specified in this Section, and shall use commercially reasonable
efforts to mitigate the impact of any such event.
10.2 The Parties acknowledge that at time of this Agreement, some of the
licenses, permits and consents required for the installation and
operation of the VGSIEN have not been obtained. VGSL shall not be
liable for any failure or delay in providing any Service which is due
to failure or delay in obtaining any license, certification,
authorization or similar governmental authority needed to supply such
Service, provided that VGSL shall have made commercially reasonable
efforts to obtain such authority. VGSL and FTINL shall, and shall
procure that the other members of VGSL and FLAG, respectively, shall,
cooperate in good faith to use their respective assets, and to take
such steps, as may be reasonable and practicable to avoid or limit the
impact of any such failure or delay.
11. DISPUTE RESOLUTION
11.1 Except as otherwise provided in Section 4, all disputes, controversies
or differences arising out of this Agreement will be submitted by the
Parties to a panel composed of one principal appointed by each of the
Parties. This panel will meet for three days, or for such longer
period as they may agree, in order to resolve the dispute, controversy
or difference. All information exchanged by the principals in
resolving the dispute, controversy, or difference may be used by the
Parties only for the purpose of resolving the dispute, controversy, or
difference and for no other purpose except as may be agreed by the
Parties in writing. If the principals resolve the dispute, the terms
of the resolution will be set forth in a written settlement agreement
that will be signed by the Parties. If the dispute, difference, or
controversy is not resolved by the principals after three days of
meetings, or for such longer period as the principals may agree,
-18-
then the Parties may pursue formal arbitration as set forth below.
Each Party will bear its own costs in connection with this informal
dispute resolution process except as the Parties otherwise agree in
writing. Nothing in the foregoing shall be deemed to limit any rights
or remedies available to either Party at law or in equity.
11.2 In the event that a dispute remains unsettled after the procedures set
forth above have been exhausted, either Party notify the other in
writing that the dispute is being submitted to arbitration in
accordance with and subject to the Rules of Arbitration of the
International Chamber of Commerce and finally settled by three
arbitrators appointed in accordance with such rules, unless the
Parties to the arbitration agree upon a single arbitrator under such
rules. The place of arbitration shall be London, U.K. The arbitrators
shall decide any such dispute strictly in accordance with the
governing law specified in Section 14.6. Any decision or award of the
arbitral tribunal shall be final and binding upon the Parties, and
judgment on the decision or award may be entered in any court having
jurisdiction thereof or having jurisdiction over either of the Parties
or any of their assets, and the Parties hereby consent to the
jurisdiction of any court in a proceeding to enforce such decision or
award. The arbitrator(s) shall have the right to award costs,
including legal fees.
12. CONFIDENTIALITY
12.1 Each Party agrees that all information furnished to it by the other
Party (or its Affiliates), or to which it has access under this
Agreement, shall be deemed the confidential and proprietary
information or trade secrets (collectively referred to as "PROPRIETARY
INFORMATION") of the Disclosing Party and shall remain the sole and
exclusive property of the Disclosing Party (the Party furnishing the
Proprietary Information referred to as the "DISCLOSING PARTY" and the
other Party referred to as the "RECEIVING PARTY"). Neither Party shall
use the Proprietary Information of the other Party for any purpose
other than the performance of its obligations under this Agreement.
Each Party shall treat the
-19-
Proprietary Information of the other Party, and the contents of this
Agreement, in a confidential manner and shall not, without the written
consent of the Disclosing Party, directly or indirectly disclose the
same to anyone other than its employees and Affiliates, and its
consultants, vendors and contractors, who need to know such
information for the purposes of this Agreement and who agree to be
bound by the terms of this Section 12.
12.2 The confidentiality of obligations of this Section 12 do not apply to
any portion of the Proprietary Information which is (i) or becomes
public knowledge through no fault of the Receiving Party; (ii) in the
lawful possession of Receiving Party prior to disclosure of the
Proprietary Information to the Receiving Party by the Disclosing Party
(as confirmed by the Receiving Party's records); or (iii) disclosed to
the Receiving Party without restriction on disclosure by a person who
has the lawful right to disclose the information. If the Receiving
Party is requested or legally compelled by any court, agency,
authority, department, regulatory body or other instrumentality of any
government or country to disclose any of the Proprietary Information
of the Disclosing Party or any of the contents of this Agreement, the
Receiving Party agrees that it will provide the Disclosing Party with
prompt written notice of such requests so that the Disclosing Party
has the opportunity to pursue its legal and equitable remedies
regarding potential disclosure, and the Receiving Party will seek
confidential treatment for any such information which it is ultimately
required to disclose.
12.3 Each Party acknowledges that its breach or threatened breach of this
Section 12 may cause the Disclosing Party irreparable harm which would
not be adequately compensated by monetary damages. Accordingly, in the
event of any such breach or threatened breach, the Receiving Party
agrees that equitable relief, including temporary or permanent
injunctions, is an available remedy in addition to any legal remedies
to which the Disclosing Party may be entitled.
-20-
12.4 Neither Party may use the name, logo, trade name, service marks, trade
marks, or printed materials of the other Party, in any promotional or
advertising material, statement, document, press release or broadcast
without the prior written consent of the other Party, which consent
may be granted or withheld at the other Party's sole discretion.
12.5 Each Party shall ensure that each of its managers and executive
employees engaged in Alliance is legally bound by confidentiality
obligations in connection with his or her employment by such Party.
13. COMPLIANCE WITH LAWS
During the term of this Agreement, the Parties shall comply with all local,
state, federal and national laws and regulations applicable to this
Agreement and to their respective businesses. Further, each Party shall
obtain, file and maintain any tariffs, permits, certifications,
authorizations, licenses or similar documentation as may be required by any
governmental agency having jurisdiction over its business
("AUTHORIZATIONS"). Upon the request of a Party, which request shall be no
more frequent than once every six months (unless based on a request or an
order of a governmental agency having jurisdiction over either Party), the
other Party will provide documentation showing that the Party has complied
with applicable governmental requirements. The Parties shall conform with
applicable privacy directives, laws and regulations governing their
businesses.
14. MISCELLANEOUS
14.1 PUBLICITY. (a) Neither Party will make any public announcement of the
formation of the Alliance, or of the execution of this Agreement,
without the prior consent of the other Party, which consent shall not
be unreasonably withheld or delayed; provided that a Party may make
such announcement without such prior consent if such an announcement
is required by applicable laws or regulations or the rules of any
applicable stock exchange and it is impracticable to obtain such prior
consent.
-21-
(b) The Parties will use commercially reasonable efforts to ensure
that any press release, announcement or other public communication,
including any issued by a controlled affiliate participating in the
VGSIEN, regarding FLAG's participation in the VGSIEN shall be
consistent with the spirit that VGSL and FTINL have formed a network
alliance with respect to the VGSIEN rather than a supplier/customer
relationship. Further, VGSL will also advise Genuity, Inc. that VGSL
and FTINL have formed a "network alliance" and request that, in the
event that Genuity, Inc. might discuss FLAG and its participation in
the VGSIEN with third parties, it do so in a manner consistent with
the spirit of the network alliance.
14.2 WAIVERS. Except as set forth in Section 4, no waiver of any term or
condition of this Agreement shall be enforceable unless it is in
writing and signed by the Party against whom it is sought to be
charged. No failure or delay by either Party in exercising any right,
power or remedy will operate as a waiver of any such right, power or
remedy, unless otherwise provided herein. The waiver by either Party
of any of the covenants, conditions or agreements to be performed by
the other or any breach thereof shall not operate or be construed as a
waiver of any subsequent breach of any such covenant, condition or
agreement.
14.3 ASSIGNMENT. Neither Party may assign or transfer its rights or
obligations under this Agreement without the other Party's written
consent. Any assignment or transfer without the required consent is
void. The foregoing notwithstanding, either Party may assign this
Agreement to an entity which is directly or indirectly wholly owned
either by such Party or by a company which directly or indirectly
wholly owns such Party without the other Party's consent.
14.4 INTEGRATION; CONSISTENCY. This Agreement and all Exhibits, schedules
and other attachments attached hereto (which Exhibits, schedules and
other attachments are hereby incorporated by reference), represent the
entire agreement between the Parties with respect to the subject
matter hereof and supersede and merge
-22-
all prior agreements, promises, understandings, statements,
representations, warranties, indemnities and inducements to the making
of this Agreement relied upon by either Party, whether written or
oral. In the event of any inconsistency between the terms of this
Agreement and the terms of any Exhibits, schedules and other
attachments incorporated herein, the terms of such Exhibits, schedules
and other attachments shall prevail.
14.5 CONSTRUCTION. The language used in this Agreement is deemed the
language chosen by the Parties to express their mutual intent. No rule
of strict construction shall be applied against either Party. Article
and Section headings are used in this Agreement for purposes of
convenience only, and shall not be deemed a part of this Agreement nor
used to interpret or construe the provisions hereof. Any reference
herein to any article, section, subsection, paragraph, subparagraph,
exhibit, schedule or attachment shall be deemed a reference to such
portion of this Agreement unless otherwise specified.
14.6 GOVERNING LAW. This Agreement will be construed and enforced in
accordance with the law of the state of New York, without regard to
that state's choice of law principles.
14.7 NOTICES. All notices, including but not limited to, demands, requests
and other communications required or permitted hereunder (not
including Invoices) shall be in writing and shall be deemed given: (i)
when delivered in person, (ii) 24 hours after deposit with an
overnight delivery service for next day delivery, (iii) the same day
when sent by facsimile transmission during normal business hours,
receipt confirmed by sender's equipment, or (iv) seven Business Days
after deposit in the official mail service of the sender's
jurisdiction, postage prepaid, registered or certified mail, return
receipt requested, and addressed to the recipient Party at the address
set forth below:
-23-
If to FTINL or FLAG: FLAG Telecom Ireland Network Limited
Office 000
Xxxxxxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx
with a copy to: FLAG Telecom Limited
0 Xxxxx Xxxxxx
Xxxxxx X0X 0XX, Xxxxxx Xxxxxxx
Attn: General Counsel
Facsimile #: x00-00-0000-0000
If to VGSL: Verizon Global Solutions Inc.
000 Xxxxx Xxxx
Xxxxxxx Xxxxxx, Xxx Xxxxxx 00000, XXX
Attn: Group Vice President of Carrier Sales
Facsimile #: x0-000-000-0000
with a copy to: Xxxx X. Xxxxx, Esq.
1095 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000, XXX
Facsimile #: x0-000-000-0000
14.8 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall constitute an original, but all of which shall
constitute one and the same instrument.
14.9 NO THIRD PARTY BENEFICIARIES. The provisions of this Agreement and the
rights and obligations created hereunder are intended for the sole
benefit of VGS and FLAG, and do not create any right, claim or benefit
on the part of any other person not a Party to this Agreement.
14.10 SURVIVAL. Any obligations of the Parties relating to monies owed, as
well as those provisions relating to confidentiality, limitations on
liability and indemnification, shall survive termination of this
Agreement.
14.11 SEVERABILITY. The illegality or unenforceability of any provision of
this Agreement does not affect the legality or enforceability of any
other provision or portion. If any provision or portion of this
Agreement is deemed illegal or unenforceable for any reason, there
shall be deemed to be made such minimum
-24-
change in such provision or portion as is necessary to make it valid
and enforceable as so modified.
14.12 CUMULATIVE RIGHTS AND REMEDIES. Except as may otherwise be provided
herein, the assertion by a Party of any right or the obtaining of any
remedy hereunder shall not preclude such Party from asserting or
obtaining any other right or remedy, at law or in equity, hereunder.
14.13 AMENDMENTS. Any amendments or modifications to this Agreement must be
in writing and signed by a Vice President (or higher level officer) of
each of the Parties.
14.14 AUTHORITY. Each individual executing below on behalf of a Party
hereby represents and warrants to the other Party that such individual
is duly authorized to execute and deliver this Agreement. By its
signature below, each Party acknowledges and agrees that sufficient
allowance has been made for review of this Agreement by respective
counsel and that each Party has been advised by its legal counsel as
to its legal rights, duties and obligations under this Agreement.
-25-
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first set forth above.
FLAG TELECOM IRELAND NETWORK VERIZON GLOBAL SOLUTIONS
LIMITED HOLDINGS II LTD.
By: By:
-------------------------- ------------------------------
Name: Name:
Title: Title:
EXHIBIT A
INITIAL FORECAST
TOTAL TRAFFIC BY SERVICE 2001
--------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------
A-END B-END INCLUDED OR E1 DS3 STM1 STM-4S STM-16S WAVELENGTHS
EXCLUDED BY GSI
AT FLAG
DIRECTION
--------------------------------------------------------------------
Amsterdam Brussels Included
Amsterdam Cairo Excluded 2 1
Amsterdam Dusseldorf Included
Amsterdam Frankfurt Included
Amsterdam Hamburg Excluded
Amsterdam Hong Kong Excluded 1 1
Amsterdam Los Angeles Excluded
Amsterdam London Included (Paris) 3 1 1
Amsterdam Madrid Excluded
Amsterdam Milan Excluded
Amsterdam Munich Excluded
Amsterdam New York Included (Paris) 1 2 3 2 1
Amsterdam Paris Included
Amsterdam San Francisco Excluded
Amsterdam Xxxxx Xxxxxxxx 0
Xxxxxxxxx Xxxxxxxxx Excluded 1 1
Amsterdam Tokyo Excluded 1 2
Brussels Cairo Excluded
Brussels Dusseldorf Included
Brussels Frankfurt Included
Brussels Hamburg Excluded
Brussels Hong Kong Excluded 1
Brussels Los Angeles Excluded
Brussels London Included (Paris) 1 2
Brussels Madrid Excluded
Brussels Milan Excluded
Brussels Munich Excluded
Brussels New York Included (Paris) 1 3 2 1
Brussels Paris Included
Brussels San Francisco Excluded
Brussels Seoul Excluded 1
Brussels Singapore Excluded 1
Brussels Tokyo Excluded 1
Cairo London Excluded 8 3 2
Cairo Madrid Excluded
Cairo Milan Excluded
Cairo Paris Excluded 2 2 1
Cairo Dusseldorf Excluded
Cairo Frankfurt Excluded 2 1
Cairo Hamburg Excluded
Cairo Munich Excluded
Dusseldorf Frankfurt Included
Dusseldorf Hamburg Excluded
Dusseldorf Hong Kong Excluded
Dusseldorf Los Angeles Excluded
TOTAL TRAFFIC BY SERVICE 2001
--------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------
A-END B-END INCLUDED OR E1 DS3 STM1 STM-4S STM-16S WAVELENGTHS
EXCLUDED BY GSI
AT FLAG
DIRECTION
--------------------------------------------------------------------
Dusseldorf London Included (Paris) 2 1
Dusseldorf Madrid Excluded
Dusseldorf Milan Excluded
Dusseldorf Munich Excluded
Dusseldorf New York Included (Paris) 1 2 2 1
Dusseldorf Paris Included
Dusseldorf San Francisco Excluded
Dusseldorf Xxxxx Xxxxxxxx 0
Xxxxxxxxxx Xxxxxxxxx Excluded 0
Xxxxxxxxxx Xxxxx Excluded 0
Xxxxxxxxx Xxxxxxx Xxxxxxxx
Xxxxxxxxx Xxxx Xxxx Excluded
Frankfurt Los Angeles Excluded
Frankfurt London Included (Paris) 1 2 1 1
Frankfurt Madrid Excluded
Frankfurt Milan Excluded
Frankfurt Munich Excluded
Frankfurt New York Included (Paris) 1 3 6 2 2
Frankfurt Paris Included
Frankfurt San Francisco Excluded
Frankfurt Seoul Excluded 1
Frankfurt Singapore Excluded 0
Xxxxxxxxx Xxxxx Excluded 2 1
Hamburg Hong Kong Excluded
Hamburg Los Angeles Excluded
Hamburg London Excluded 2 1
Hamburg Madrid Excluded
Hamburg Milan Excluded
Hamburg Munich Excluded
Hamburg New York Excluded 1 1 1
Hamburg Paris Excluded
Hamburg Hong Kong Excluded
Hamburg San Francisco Excluded
Hamburg Seoul Excluded
Hamburg Singapore Excluded
Hamburg Tokyo Excluded
Hong Kong London Excluded 5 1
Hong Kong Madrid Excluded
Hong Kong Milan Excluded
Hong Kong Munich Excluded
Hong Kong Paris Excluded 3 1
London Chicago Excluded 1
London Riayadh Excluded 6
London Karachi Excluded 2
London Madrid Excluded 2 1
London Milan Excluded 3 2
London New York Excluded 4 4 24 14 3 3
London Paris Excluded 1 3 1
London San Francisco Excluded
London Seoul Excluded 2 1 1
London Singapore Excluded 0
Xxxxxx Xxxxx Xxxxxxxx 0 0 0
Xxxxxx Xxxxxx Excluded 2 1
Los Angeles London Excluded
Los Angeles Madrid Excluded
Los Angeles Milan Excluded
Los Angeles Paris Excluded
Los Angeles Munich Excluded
Madrid Milan Excluded
Madrid New York Excluded
Madrid Paris Excluded
Madrid San Francisco Excluded
Madrid Seoul Excluded
Madrid Singapore Excluded
Exhibit A-2
TOTAL TRAFFIC BY SERVICE 2001
--------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------
A-END B-END INCLUDED OR E1 DS3 STM1 STM-4S STM-16S WAVELENGTHS
EXCLUDED BY GSI
AT FLAG
DIRECTION
--------------------------------------------------------------------
Madrid Tokyo Excluded
Madrid Munich Excluded
Milan New York Excluded 1 3 3 1 1
Milan Paris Excluded
Milan San Francisco Excluded
Milan Seoul Excluded
Milan Singapore Excluded
Milan Tokyo Excluded
Milan Munich Excluded
Munich New York Excluded 1 3
Munich Paris Excluded
Munich San Francisco Excluded
Munich Seoul Excluded
Munich Singapore Excluded
Munich Tokyo Excluded
New York Paris Excluded 2 5 9 7 1 2
Paris San Francisco Excluded
Paris Xxxxx Xxxxxxxx 0
Xxxxx Xxxxxxxxx Excluded 1
Paris Tokyo Excluded 5 2
--------------------------------------------------------------------
Current 68 70 71 32 4 10
Included 5 18 18 7 4
Excluded 63 52 53 25 4 6
Total 68 70 71 32 4 10
Exhibit A-3
TOTAL TRAFFIC BY SERVICE 2001
--------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------
A-END B-END INCLUDED OR E1 DS3 STM1 STM-4S STM-16S WAVELENGTHS
EXCLUDED BY GSI
AT FLAG
DIRECTION
--------------------------------------------------------------------
[*]
Included
Excluded
Total
------------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
Exhibit A-4
EXHIBIT B
SERVICE PRICING FOR INCREMENTAL PURCHASES
PRICING PRINCIPLES
Pricing for the Initial Purchase is contained in Exhibit D. VGSL's prices for
Incremental Purchases shall be [*] as set forth in this Exhibit. In addition,
a one-time administrative fee will be charged for [*]. Costs will be
calculated [*].
IRU PRICES
The "IRU PRICE" for each Service will be [*]. Service pricing will in general
include the following cost components:
[*]
Methodology
In accordance with the above principles, the detailed methodology is as follows:
[*]
[*]
[*]
[*]
[*]
------------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
O&M CHARGES
The annual operations and maintenance charge ("O&M CHARGE") for each Service
will be [*] paid for such Service, as follows:
-------------------------------------------------------------------------------
YEAR IN TERM OF IRU ANNUAL O&M CHARGE AS PERCENTAGE OF
IRU PRICE
-------------------------------------------------------------------------------
Years 1-5 [*]%
Years 5-10 [*]%
Years 11-15 [*]%
-------------------------------------------------------------------------------
Any additional costs incurred due to FLAG-requested re-arrangements, service
requests, and/or FLAG requirements outside of normal industry practices will be
incremental to the percentages referenced above and will be marked up [*]%.
NON-CORE ELEMENTS
Other elements ("Non-Core Elements") which each Party may choose to deploy at
its own expense and which shall not be included in Core Element Costs include:
[*]
ACCESS TO INFORMATION
VGSL will use commercially reasonable efforts to provide FLAG with comfort on
the calculation of cost to FLAG. VGSL will work in good faith to determine the
mechanism for providing such comfort.
------------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
EXHIBIT B-1
SERVICE SCHEDULE - MANAGED BANDWIDTH SERVICES
15. PRODUCT DEFINITION
Managed Bandwidth Service is offered on a PoP-to-PoP basis, where FLAG
interconnects to the service in a PoP location. Managed Bandwidth Services are
available in DS1/E1 or higher bandwidth rates. A PoP is defined as a Point of
Presence within the VGSIEN.
15.1 Bandwidth Rates
Managed Bandwidth Services PoP-to-PoP only:
o DS1, E1
o DS3, E3
o OC3, OC-3c, STM1
o OC-12, OC-12c STM4
o OC-48, STM16
o OC-192, STM64
The Managed Bandwidth Service is based on SONET/SDH as the underlying network
technology. Synchronous Optical Network is a family of optical transmission
rates and interface standards allowing internetworking of products from
different vendors. Base optical rate is 51.840 Mb/s. Higher rates are direct
multiples. DS1, DS3, SONET (OC-3, OC-12, OC-48, OC-3c, OC-12c, and OC-48c) SDH
(STM1, STM4, STM16, STM64)
Optical Carrier level 1 (OC-1): The optical signal that results from an optical
conversion of an electrical STS-1 signal (51.840 Mb/s).
o STM1/OC-3: Optical Carrier level 3 signal operating at 155.520 Mb/s.
o STM4/OC-12: Optical Carrier level 12 signal transmitting at 622.080 Mb/s.
o STM16/OC-48: Optical Carrier level 48 signal transmitting at 2488.32 Mb/s.
o STM64/OC-192 Optical Carrier level 192 signal transmitting at 9953.28 Mb/s
16. MANAGED BANDWIDTH SERVICES (POP-TO-POP) SERVICE ARRANGEMENTS
16.1 VGSIEN Network Facilities with Redundant Capabilities
The VGSIEN Transport Network will be managed by VGSI's SMC operations [by
07/01/01]. PoP-to-PoP bandwidth will be offered to FLAG from DS1/E1 through
STM1/64,/OC-N.
The VGSIEN PoPs are located in London, Paris, Brussels, Amsterdam,
Frankfurt and Duesseldorf.
The VGSIEN PoP locations are depicted above. Managed Bandwidth services
over the VGSIEN will be available between any of these PoP locations.
16.2 Customer Interface Specification
FLAG will interface to the Managed Bandwidth Service with direct
connections at VGSIEN PoPs. The meet-me point is an electrical or optical
interface (DS1/E1, X0/XX0, XXX0, XXX0, XXX00, STM64). The VGSIEN will
utilize the Lucent BWD network element to groom STM1 segments, Digital
Cross-connect Systems will be used to groom DS1/E1 segments and electrical
interfaces will be made available to FLAG.
LOCAL ACCESS PROVISIONING
Not included
BANDWIDTH
DS1, E1
DS3, E3
OC3, OC-3c STM1
XX-00, XX-00x XXX0
XX-00 XXX00
XX-000 STM 64
MANAGED BANDWIDTH PRESENTATION
DCS cross-connect
LGX cross-connect
Standardized 1310 nm or 1550 nm
BACKBONE TECHNOLOGY
DWDM
16.3 Reliability
o Diversely routed unprotected paths
o One spare channel per link
o Bit error rate performance per G.826
o Jitter and Wander compliant with G.813 and G.825
EXHIBIT B - 2
SERVICE SCHEDULE - WAVELENGTH BANDWIDTH SERVICES
1. PRODUCT DEFINITION
Wavelength bandwidth capacity is provided at the 2.5Gbps (OC-48c) and 10Gbps
(OC-192c) based on DWDM (dense wave division multiplexing) technology with the
inherent capability of providing wavelength services.
VGSIEN is a WDM Optical Ring that provides transit on the 10 Gbps bandwidth.
VGSI monitors optical parameters on a PoP-to-PoP basis. Dense Wavelength
Division Multiplexing (DWDM) systems are coupled with optical amplifier
solutions to provide optical transport scalable to 1.6 terabits per second over
a single strand of fiber or can transport optical signals up to 4000 km without
electrical regeneration.
DWDM is available in all VGSIEN PoP locations depicted in the diagram below.
Wavelength services may be offered between any two VGSIEN PoP locations on the
network ring.
[GRAPHIC--ORGANIZATIONAL CHART]
The diagram above depicts the VGSIEN North European ring. All PoPs have DWDM
capabilities.
As an example, if FLAG buys a wavelength from GSI between Amsterdam and London,
the service is sold as a linear service, and the redundant portion would be made
available at an additional cost to FLAG.
2. FEATURES
o Concatenation: Multiple signals are linked together with reduced
overhead.
o Transparency: FLAG dictates the type of service received from the
OC-192/OC-48 bandwidth. Protection Switching: Protection switching and
restoration is provided by VGSL.
o Clear Channel: The VGSIEN is Clear Channel capable.
o Customized Bandwidth: The OC-192/48 bandwidth may be divided into
segments.
3. INTERFACE SPECIFICATIONS
FLAG will interface to the VGSIEN Wavelength bandwidth service with
direct optical connections on the LGX bay which interconnects the
VGSIEN DWDM equipment in the VGSIEN PoPs. The meet-me point is an
optical interface on the Light Guide Crossconnect system (OC-48,
OC-192).
LOCAL ACCESS PROVISIONING
Not included
BANDWIDTH
2.5 Gbps/10 Gbps
BANDWIDTH PRESENTATION
Standardized G.957
WAVELENGTH FREQUENCIES
Standardized 1310 nm or 1550 nm
BACKBONE TECHNOLOGY
Dense Wave Division Multiplexing
3.1 Reliability
o Diversely routed unprotected paths
o One spare channel per link
o Bit error rate performance per G.826
o Jitter and Wander compliant with G.813 and G.825
EXHIBIT B - 3
SERVICE LEVEL AGREEMENTS
1. SLA MEASUREMENT
Each SLA is outlined below and will be measured each month for each Service.
2. SERVICE PROVISIONING
o VGSL will respond within [*] hours to a request for Service Feasibility for
those Services included in FLAG's Initial Purchase which do not entail any
special design requirements.
o VGSL will deliver Services in five business days from receipt of a Service
Order. This timeframe shall apply only to Services included in a FLAG
Purchase Commitment which do not entail any special design requirements and
to orders in excess of the Purchase Commitment (but still within the
associated Forecast) with respect to which VGSL has provided an affirmative
response to FLAG's request for Service Feasibility.
The Service Feasibility and Provisioning SLAs will not apply if more than [*] of
the Services included in a quarterly forecast is requested in a contiguous [*]
day period. In such cases, VGSL will nevertheless use commercially reasonable
efforts to meet such standards.
3. SERVICE AVAILABILITY
The Service Availability percentage will be calculated and measured as
follows:
Service Availability % P = A X 100
---------
B
A is the number of hours for which the circuit was available in the
relevant month. This is based on VGS OSS reporting tools.
B is the total number of hours in the month for which the availability is
being calculated.
P is the resulting Service Availability percentage.
Service will not be deemed to be unavailable, for the purposes of the
calculation above, if the unavailability arises from or is otherwise caused
by:
o FLAG requesting VGSL to test a particular circuit although no fault
has been detected or reported by VGS;
------------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
o A Service being physically modified or altered in any way at FLAG's
request in accordance with this Agreement (i.e., not record changes)
unless VGS has not performed the re-arrangement properly;
o Any suspension of the Service in accordance with the terms of this
Agreement;
o Any failure or fault arising pursuant to a Force Majeure event;
o FLAG failing to operate the Service in accordance with the terms of
this Agreement.
The period of unavailability of any Managed Bandwidth Service including
Wavelength Services (an "Outage") will be measured from the time the
unavailability is reported to the VGS Service Management Center by FLAG in
accordance with this Agreement
4. PLANNED WORK NOTIFICATION
If Service affecting, VGSL will notify FTINL of planned work [*] before the work
commences
If not Service-affecting, VGSL will endeavor to notify FTINL of planned work [*]
before the work commences
5. MEAN TIME TO REPAIR (SERVICE RESTORATION TIME)
Mean Time to Repair (MTR) will be not more than [*] hours for X0x/XX0x,
X0x/XX0x, XX0x, XX0x, XX00x,XX00x, OC-192. SDH: XXX-0, XXX-0, XXX-00, xxx
XXX-00.
VGS's Customer Care Center is available 24 hours a day, 7 days a week.
6. CIRCUIT PERFORMANCE
Circuit performance is measured using two parameters: Availability and
Error-Free Seconds.
AVAILABILITY is a measure of the relative amount of time during which the
circuit is available for use. Unavailability begins when the Bit Error Ratio
(BER) in each second is worse than 1.0 E-3 for a period of 10 consecutive
seconds in conformance with ITU Standard G.826.
ERROR-FREE SECONDS (EFS) and ERRORED SECONDS (ES) are the primary measure of
error performance. An Error-Free Second is defined as any second in which no bit
errors are received. An Errored Second is any second in which one or more bit
errors are received.
------------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
GENERAL PERFORMANCE OBJECTIVES:
Network Availability for "on net" (PoP-to-PoP) Wavelength and Managed
Bandwidth Services:
o [*]% for Linear Network
o [*]% for SONET/SDH Ring Network (when available)
AUTO-RESTORAL TIME (SONET/SDH BASED SERVICES) (DETERMINED BY SWITCHING PROTOCOL)
[*]
LATENCY
[*]
Scheduled maintenance is excluded from the performance objectives stated above.
SERVICE OUTAGES / TESTING AND CONFIRMATION PROCEDURES
A Service shall be deemed to be in an "Outage" condition if, following the
Service's In Service Date, while VGS is actually using or attempting to use such
circuit, the circuit loses continuity and becomes unavailable as defined above
or the MTR exceeds [*].
Service Outages do not include:
(a) Outage periods when FLAG has released the Service to VGS for
maintenance purposes or to make rearrangements or FLAG requested changes in
the Service;
(b) Non-Service affecting failures of VGS applications, equipment or
facilities;
(c) Acts or omissions of FLAG or any user of the Service authorized by
FLAG; or
(d) Outages resulting from Force Majeure.
* * *
Service Availability and Circuit Performance for all circuits between PoPs will
be determined on a rolling [*]. The Parties will work together to keep this
determination period in pace with changing market standards.
------------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
7. CONTACTS
In order to provide a standard communication and escalation channel, VGS will
provide contact and escalation names and numbers, which correspond to the FLAG
contacts, for each of the key functions identified below. FLAG and VGS will
jointly create a single point of contact for Service Provisioning and a separate
single point of contact for Fault Management.
----------------------------------------------------------------------------------------------------------------------
REQUIREMENT FLAG GROUP RESPONSIBLE VGS GROUP RESPONSIBLE
----------------------------------------------------------------------------------------------------------------------
Service Feasibility and Quotation Customer Provisioning Centre (CPC) Customer Support Center (CSC)
Service Ordering CPC CSC
Service Provisioning and Activation CPC CSC
Service Hand-over CPC CSC
Service Operations/Fault Mgmt Network Operations Centre (NOC) Service Management Center (SMC)
Planned Work Customer Care Carrier Relations
Escalation Carrier Relations Carrier Relations
----------------------------------------------------------------------------------------------------------------------
FLAG GROUP CONTACT INFORMATION:
----------------------------------------------------------------------------------------------------------------------
GROUP CONTACT PHONE E-MAIL
----------------------------------------------------------------------------------------------------------------------
CPC Xxxx Xxxxx
NOC Xxxxx Xxxxx
Customer Care Customer Rep
Carrier Relations Director-Carrier Relations
----------------------------------------------------------------------------------------------------------------------
VGS GROUP CONTACT INFORMATION:
----------------------------------------------------------------------------------------------------------------------
GROUP CONTACT PHONE E-MAIL
----------------------------------------------------------------------------------------------------------------------
CSC Xxxxx Xxxxxx 000-000-0000
NOC Xxxxxxx Xxxxxx 000-000-0000
Customer Care Customer Rep
Carrier Relations Xxxxxx Xxxxx 000-000-0000
----------------------------------------------------------------------------------------------------------------------
8. CREDITS
Credits will be applied for failure to meet commitments detailed in the SLAs as
set forth in the tables below. Credits for failures to meet SLA commitments will
be capped at $[*] over any [*] period. All cost and credit amounts in the tables
below are in US$.
----------------------------------------------------------------------------------------------------------------------------
PROVISIONING CREDIT CALCULATION
----------------------------------------------------------------------------------------------------------------------------
DAYS BEYOND ISD
----------------------------------------------------------------------------------------------------------------------------
SERVICE MONTHLY SERVICE ANNUAL SERVICE UP TO [*] BETWEEN [*] BETWEEN [*] OVER [*]
COST COST DAYS DAYS DAYS DAYS
----------------------------------------------------------------------------------------------------------------------------
[*]% [*]% [*]% [*]%
----------------------------------------------------------------------------------------------------------------------------
CREDIT
----------------------------------------------------------------------------------------------------------------------------
E1 [*] [*] [*] [*] [*] [*]
DS3 [*] [*] [*] [*] [*] [*]
STM-1 [*] [*] [*] [*] [*] [*]
STM-4 [*] [*] [*] [*] [*] [*]
Wavelength [*] [*] [*] [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
CIRCUIT PERFORMANCE CALCULATION NETWORK AVAILABILITY
-------------------------------------------------------------------------------------------------------------------------------
MONTHLY ANNUAL NOT TO
SERVICE SERVICE [*]% OR [*]% - [*]% - [*]% - LESS THAN EXCEED
COST COST GREATER [*]% [*]% [*]% [*]% (PER ANNUM)
-------------------------------------------------------------------------------------------------------------------------------
CREDIT
-------------------------------------------------------------------------------------------------------------------------------
[*]% [*]% [*]% [*]% [*]%
-------------------------------------------------------------------------------------------------------------------------------
E1 [*] [*] [*] [*] [*] [*] [*] [*]
DS3 [*] [*] [*] [*] [*] [*] [*] [*]
STM-1 [*] [*] [*] [*] [*] [*] [*] [*]
STM-4 [*] [*] [*] [*] [*] [*] [*] [*]
Wavelength [*] [*] [*] [*] [*] [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------------
------------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
-----------------------------------------------------------------------------------------------------
MEAN TIME REPAIR CREDIT CALCULATION
(Pertains only to service unavailability of [*] or more)
-----------------------------------------------------------------------------------------------------
MONTHLY SERVICE ANNUAL SERVICE [*]% OF ANNUAL MAXIMUM CREDIT
COST COST AMOUNT
-----------------------------------------------------------------------------------------------------
E1 [*] [*] [*] [*]
DS3 [*] [*] [*] [*]
STM-1 [*] [*] [*] [*]
STM-4 [*] [*] [*] [*]
Wavelength [*] [*] [*] [*]
-----------------------------------------------------------------------------------------------------
------------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
EXHIBIT C
NETWORK DESCRIPTION; ROLES AND RESPONSIBILITIES
[GRAPHIC--NORTH EUROPEAN NETWORK CHART]
VGSL and FTINL agree that through the Alliance, VGSL will provide and manage all
network elements and facilities used by the Alliance on the PoP to PoP VGSIEN
network. External to the VGSIEN, FLAG will provide and manage the elements and
systems directly related to FLAG's IP layer and space for FLAG customer
equipment.
VGSL supplied elements:
o Fiber
o Physical location space (not including any co-location space for
co-locating FLAG's customers' equipment)
o WDM and SDH equipment
o DCN and OSS related to the above
FLAG supplied elements
o FLAG routers (Juniper)
o Edge routers
o All associated FLAG IP OSS systems
o Co-location space for FLAG's customers' equipment
NETWORK DEMARCATION
VGS - FLAG Interconnect
Point
[ORGANIZATIONAL GRAPHIC]
o A demarcation point will be supplied in each co-location point from
which point the following relationship will govern FLAG's IP layer
equipment resident within that location.
o VGSL will work with FLAG to determine the feasibility and requirements
of providing "test points" at the very edge of the VGSIEN network at
some point in the future. FLAG will have access to these "test points"
through the test systems reporting facilities managed by VGSL. In the
interim, VGSL will perform manual tests to meet FLAG requirements on a
VGSIEN PoP to PoP basis.
VGSL RESPONSIBILITIES
o Provide EFI, operations and maintenance on all VGSIEN network elements
and facilities. This does not include FLAG's IP layer equipment,
network systems, and any other FLAG systems.
o Design of the network, this converts the Service requirements into
VGSL's network planning and implementation. This includes, without
limitation, the choice of supplier and suppliers equipment.
Exhibit C-2
o Procure all equipment and fiber including ancillary equipment such as
power plants, air conditioning, clock distribution circuits.
o Manage the installation of all the equipment through the supplier(s).
o Negotiate with the landlords for all required equipment and NOC space.
o Manage the non-FLAG IP supplier's developmental activities for any
interfaces between surveillance systems procured under this agreement
with existing FLAG provided systems.
o Authorization of payment of relevant suppliers.
o Provision all VGSIEN network elements between the FLAG IP layer
demarcation points established at each POP.
o Provide a basic level of maintenance for FLAG's IP layer equipment as
may be mutually agreed between the Parties. This will include:
o Card replacement
o Basic wiring
o Surveillance of all VGSIEN equipment, except the FLAG IP equipment.
o Assignment of all transport Services.
o Implementation of all FLAG requested Services in a timely manner as
specified in the Service Level Agreements.
o Maintenance of all equipment and building space. (One exception would
be the FLAG IP equipment which VGSL would maintain as described
above.)
o Negotiate with suppliers for maintenance support.
o Manage the performance of all relevant suppliers (equipment, fiber,
landlords)
o Preparation of a monthly review of performance and presenting
according to FLAG's reasonable requirements the same to FTINL for its
review.
o VGSL will provide agreed to network views to FLAG via remote
terminal-based surveillance devices.
FLAG RESPONSIBILITIES
o FLAG will EFI FLAG's IP layer equipment and associated DCN equipment.
o FLAG will provide advanced maintenance and administration of FLAG's IP
layer equipment and associated DCN including:
Exhibit C-3
o Troubleshooting
o Local and remote configuration
o Hardware and software upgrades and augmentation etc.
o Manage the IP supplier's developmental activities for any interfaces
between surveillance systems procured under this Agreement.
o FLAG will perform the surveillance and control function on the Juniper
routers.
JOINT VGSL-FLAG RESPONSIBILITIES
o In order to ensure the realization of a targeted, timely network
implementation, VGSL and FLAG commit to do ongoing, detailed
discussions of network topology and capacity requirements.
o VGSL and FLAG will jointly establish escalation contacts, procedures
and time intervals. The target model is to provide a single point of
contact that can perform both logging and low level troubleshooting.
VGSL and FLAG will also establish bureau to bureau, NOC to NOC and
cross-departmental relationships to handle troubles of differing
complexity in an expedient and efficient manner.
o Provisioned and Ordered records will be held by both organizations and
updated simultaneously as circuits are provided and ceased.
o Periodic exercises to compare and correct any variations that exist
between the two sets of records will be carried out. Development of
mutually agreed automated interfaces between relevant OSS systems to
maintain these records within a year of executing this Agreement.
o VGSL and FLAG will co-operate on achieving a means of aligning or
cross-referencing order references, circuit identification
designations etc. to enable unambiguous identification of these
entities.
SYSTEMS AND OPERATIONS INTERACTIONS
o VGSL will provide fault, capacity and performance monitoring services
throughout the VGSIEN network for all elements except FLAG's IP layer
elements and their associated DCN.
o VGSL will provide FLAG with a mutually agreed upon "read-only" view of
the following parameters associated with FLAG's bandwidth on the
VGSIEN:
o Fault alarms
o Pertinent performance indicators
Exhibit C-4
o FLAG will provide pertinent status information regarding FLAG's IP
layer network elements to VGSL to aid in fault isolation and testing.
o Mutually agreed interfaces will be developed within a year of
executing this Agreement to allow for the automated transfer of
trouble tickets and service orders generated by the FLAG systems into
the VGS systems.
o VGSL will provide Service order confirmations for FLAG's use in order
to build and maintain a database of orders active circuit information.
o The following general principles will apply with respect to the BSS
and OSS systems used by VGS and FLAG:
o OSS shall provide maximum amount of flow through for service
orders and changes
o OSS shall recognize various operational alarms
o OSS shall provide customer care work flow and status
o OSS shall provide information for customer SLA reports
o All information is confidential and cannot be used for
competitive purposes
o Mutually agreed interfaces to FLAG's Workflow Management and Inventory
systems will be developed in parallel, with mutually agreed automation
of interfaces being achieved within a year of executing this
Agreement.
o Reporting requirements from systems to enable the generation of update
information, performance reporting and SLA management to be specified.
o Ongoing discussions will be conducted to keep both parties informed of
the timing of various evolutionary milestones in each company's
systems development/implementation.
o The
Network Alliance agreement covers VGSIEN PoP-to-PoP services and
therefore any performance measurements and SLAs would only apply to
that section of an end-to-end circuit. However, both parties agree
that they will work together in support of the commitments that had
been made to FLAG's end customers.
o By the VGSIEN Ready for Service date, the following processes will be
established between FLAG and VGSL:
o Order flow
o End to end testing process and responsibilities
o Customer acceptance
o VGSL and FLAG will establish bureau to bureau, NOC to NOC and
cross-departmental relationships to handle the various troubles
that will need to be addressed
Exhibit C-5
EXHIBIT D
PRICING FOR INITIAL PURCHASE COMMITMENT
The purchase price for the Initial Forecast is US$[*] on a [*] year IRU Basis
plus annual O&M Charges as noted below. Accordingly, the purchase price for the
Initial Purchase is US$[*] (plus annual O&M Charges).
OPERATIONS AND MAINTENANCE ON EUROPEAN NORTHERN RING INITIAL PURCHASE
--------------------------------------------------------------------------
YEAR IN TERM OF IRU ANNUAL O&M CHARGE ANNUAL O&M CHARGE AS PERCENTAGE OF
IRU PRICE
--------------------------------------------------------------------------
Years 1-5 $[*] [*]%
Years 5-10 $[*] [*]%
Years 11-15 $[*] [*]%
-------------------------------------------------------------------------
Any additional costs incurred due to [*] will be incremental to the percentages
referred above and will be marked up [*]%.
The VGSIEN includes the following components:
[*].
------------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
