Exhibit 10.11
EXECUTION COPY
CERTAIN PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
[*] Confidential treatment requested
CAPACITY RIGHT OF USE AGREEMENT
THIS AGREEMENT dated as of the 25th day of June, 1999, between FLAG LIMITED
("FLAG"), a company organized under the laws of Bermuda and having its principal
office at 00 Xxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx, and INFONET BROADBAND
SERVICES CORPORATION ("Purchaser"), a company organized under the laws of
Delaware and having its principal office at 0000 Xxxx Xxxxx Xxxxxx, Xx Xxxxxxx,
Xxxxxxxxxx 00000, XXX
WITNESSETH:
WHEREAS, FLAG and other parties have entered into a Construction and
Maintenance Agreement (as amended to date, the "C&MA") to construct, operate and
maintain a fiberoptic submarine cable system known as the Fiberoptic Link Around
the Globe (the "FLAG Cable System"); and
WHEREAS, Purchaser desires to acquire from FLAG, and FLAG is willing to
provide to Purchaser, a right of use in capacity described in Section 1 below on
the FLAG Cable System (the "Capacity"); and
WHEREAS, FLAG and Purchaser (the "Parties") desire to define the terms and
conditions under which the Capacity will be acquired by Purchaser.
NOW, THEREFORE, the Parties hereby agree as follows:
1. PURCHASE OF CAPACITY
a. Purchaser agrees to acquire the right to use a whole STM-1 between the
United Kingdom and Japan between the landing stations at Porthcurno,
United Kingdom and Ninomiya, Japan ("Prime STM-1").
b. [*]
c. [*]
[*] Confidential treatment requested.
d. [*]
e. [*]
f. [*]
g. The ability of Purchaser to make use of the rights granted to
Purchaser in this Section 1 more than 24 months after the date hereof
shall be subject to Purchaser obtaining access to the FLAG Cable
System through the relevant landing stations.
h. Purchaser shall from time to time provide FLAG with not less than 30
days' prior notice of the date it wishes to activate any of the
Capacity.
i. Subject to payment of the purchase price for the Capacity Purchaser
wishes to activate pursuant hereto, Purchaser shall have the right to
use such Capacity from the date of activation until the end of its
design life (25 years after 8 October 1997) or if earlier until the
FLAG Cable System is decommissioned, which earlier decommissioning
requires the unanimous agreement of FLAG and the FLAG Cable System
landing parties under the C&MA. Purchaser shall not, pursuant to this
Agreement, have any ownership or other rights in the FLAG Cable System
itself. Nevertheless, except as otherwise provided in this Agreement,
as between
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[*] Confidential treatment requested
Purchaser and FLAG, Purchaser shall have the rights and remedies under
the C&MA with respect to the use of the Capacity as if Purchaser were
a Non-Landing Party Signatory to the C&MA. FLAG shall have no greater
obligations with regard to the Capacity or the use thereof than it
would have under the C&MA if Purchaser were a Non-Landing Party
Signatory to the C&MA.
2. PAYMENTS
a. Purchaser shall pay to FLAG the purchase price of US $45,000,000 for
the Capacity (which includes standby operation and maintenance
charges) as follows:
(i) US $18,000,000 on the earlier of [*] and 30 June 1999;
(ii) US $12,000,000 on the earlier of [*] and 30 June 2000; and
(iii) US $15,000,000 on the earlier of [*] and 30 June 2000.
FLAG shall render invoices for such amounts. For purposes hereof,
activation of Capacity shall be as set forth in the FLAG Operations
and Maintenance Plan.
b. Purchaser shall pay the required charges for each Drop and Insert
prior to its activation. FLAG shall render invoices for such charges.
c. Purchaser shall pay to FLAG all other amounts and at such times as are
set forth in, or determined pursuant to, Schedule 2 hereto.
d. Except for the payment under Section 2a(i), which is payable no later
than 30 June 1999, Purchaser shall pay all invoices rendered by FLAG
within 30 days after receipt by Purchaser. Any amount payable pursuant
to this Agreement which is not paid when due shall accrue interest at
the annual rate of 3% above the U.S. dollar LIBOR for one month as
quoted in The Wall Street Journal on the first business day of the
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month in which the payment is due. All such default interest shall
accrue from the day following the date payment of the relevant amount
was due until it is paid in full. Such interest shall be payable on
demand.
e. All amounts payable by Purchaser pursuant hereto shall be paid in full
in U.S. dollars by wire transfer to such account as FLAG may by notice
to Purchaser designate, without setoff or counterclaim and without
reduction for any deduction or withholding for or on account of any
tax, duty or other charge of whatever nature imposed by any taxing
authority of the country of Purchaser. If Purchaser is required by law
to make any deduction or withholding from any payment hereunder,
Purchaser shall gross up the amount payable so that after such
deduction or withholding the net amount received by FLAG will be not
less than the amount FLAG would have received had such deduction or
withholding not been required. Purchaser shall make the required
deduction or withholding, shall pay the amount so deducted or withheld
to the relevant governmental authority and shall promptly provide FLAG
with evidence of such payment.
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[*] Confidential treatment requested.
3. PORTABILITY
Purchaser may change the United Kingdom or Japan landing points of the
Prime STM-1 or any Prime DS-3 or the landing points of any Drop and Insert
at any time after it has been fully activated (provided that within the
Prime STM-1 or each Prime DS-3 the STM-1s or DS-3s, as applicable, remain
concatenated). Purchaser shall give FLAG not less than 90 days' notice of
its desire to make any such change, which change will be subject to
availability of the requested capacity on the FLAG Cable System and to
Purchaser obtaining access to the FLAG Cable System through the relevant
landing stations. The new capacity shall be Capacity for all purposes of
this Agreement and the replaced capacity shall cease to be Capacity. Before
the requested capacity is activated, Purchaser shall pay to FLAG a
portability fee of US$[*].
4. DEFAULT
In the event that Purchaser shall have failed to pay any amount payable by
Purchaser pursuant hereto for more than 30 days after its due date, then
FLAG may upon 15 days' notice to Purchaser deactivate all then activated
Capacity until Purchaser has paid in full all amounts overdue together with
applicable default interest.
5. REPRESENTATIONS AND WARRANTIES
a. Purchaser represents and warrants to FLAG as follows:
(i) Purchaser is duly established and in good standing under the
laws of Delaware and has full power and authority to enter into
this Agreement.
(ii) This Agreement constitutes the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in
accordance with its terms.
(iii) Purchaser is an entity authorized or permitted under the laws
and regulations of its country to acquire and use facilities for
the provision of international telecommunications services.
b. FLAG represents and warrants to Purchaser as follows:
(i) FLAG has full power and authority to enter into this Agreement.
(ii) This Agreement constitutes the legal, valid and binding
obligation of FLAG, enforceable against FLAG in accordance with
its terms.
(iii) FLAG has all permits and authorisations required by it as of the
date of this Agreement for the operation of the FLAG Cable
System in accordance with the C&MA and to provide Purchaser with
the right to use the Capacity as contemplated hereby.
c. EXCEPT AS PROVIDED ABOVE, FLAG DISCLAIMS, AND PURCHASER WAIVES, ALL
REPRESENTATIONS AND WARRANTIES REGARDING THE CAPACITY, INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE.
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6. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties with
respect to the subject matter hereof and supersedes all prior agreements,
understandings or proposals whether oral or written, with respect solely to
the subject matter hereof.
7. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of New York, United States of America, without regard to the law of New
York governing conflicts of law.
8. ASSIGNMENT
This Agreement and all the provisions hereof shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors
and permitted assigns; provided that, except for the assignment of either
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Party's rights (but not such Party's obligations) under this Agreement to
one or more financial institutions, lenders, creditors and export credit
agencies as collateral security for financing provided to such Party or in
connection with a sale of receivables, neither this Agreement nor any of
the rights, interest or obligations hereunder shall be assigned by either
of the Parties hereto without the prior written consent of the other Party,
and any attempted assignment in violation of this section shall be void.
In the event of any enforcement of such collateral security by any creditor
of Purchaser, the transferee of the Capacity shall be an entity authorised
or permitted under the laws and regulations of its country to acquire and
use facilities for the provision of international telecommunications
services.
9. LIABILITY
PURCHASER'S OBLIGATION TO MAKE PAYMENTS AND ITS OTHER OBLIGATIONS HEREUNDER
SHALL NOT BE SUBJECT TO ANY RIGHT OF SET OFF, COUNTERCLAIM, DEDUCTION,
DEFENSE OR OTHER RIGHT WHICH PURCHASER MAY HAVE AGAINST FLAG OR ANY OTHER
PARTY. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, FLAG SHALL NOT BE
LIABLE TO PURCHASER FOR ANY LOSS OR DAMAGE SUSTAINED BY REASON OF ANY
FAILURE IN OR BREAKDOWN OF THE FACILITIES CONSTITUTING THE FLAG CABLE
SYSTEM OR ANY INTERRUPTION OF SERVICE, REGARDLESS OF THE CAUSE OF SUCH
FAILURE, BREAKDOWN OR INTERRUPTION, AND REGARDLESS OF HOW LONG IT SHALL
LAST, PROVIDED THAT SUCH FAILURE, BREAKDOWN OR INTERRUPTION WAS NOT CAUSED
BY FLAG'S GROSS NEGLIGENCE OR WILFUL MISCONDUCT. IN NO EVENT SHALL EITHER
PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL
DAMAGES, WHETHER OR NOT FORSEEABLE.
10. COUNTERPARTS
This Agreement may be executed in counterparts. Any single counterpart or
set of counterparts signed, in either case, by both Parties hereto shall
constitute a full and original agreement for all purposes.
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11. NOTICES
Each notice, demand, certification or other communication given or made
under this Agreement shall be in writing and shall be delivered by hand or
sent by registered mail (airmail if international), recognized courier
service or facsimile transmission to the address of the Party as shown
below:
If to Purchaser:
0000 Xxxx Xxxxx Xxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000, XXX
Facsimile: x0-000-000-0000
Attention: Vice President, Contracts and Purchasing
If to FLAG:
4th Floor, The Emporium Xxxxxxxx
00 Xxxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Xxxxxxxxx: x0-000-000-0000
or such other address as such Party may notify in writing to the other.
12. CONFIDENTIALITY
Except in the case of a permitted assignment and except for disclosures
required by law, neither Party shall disclose the terms of this Agreement
to any third party without the prior written consent of the other Party.
Without limiting the generality of the foregoing, neither Party shall issue
any press release or otherwise publicize the existence or terms of this
Agreement without the prior written consent of the other Party.
13. FORCE MAJEURE
Neither Party shall be under any liability for failure to perform any of
its obligations hereunder (except the obligation to make any payments)
where such failure to perform arises from a Force Majeure event, including
acts of God, government control, strikes, insurrection or other civil
disorder, war or military operations, fire, lightning, explosion,
subsidence or any other event beyond the control of such Party.
14. DEFINITIONS
Terms used herein and not otherwise defined shall have the meanings
ascribed to them in the C&MA.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first set forth above.
FLAG TELECOM LIMITED
on behalf of FLAG LIMITED
By_______________________________
Name:
Title:
INFONET BROADBAND SERVICES CORPORATION
By_______________________________
Name:
Title:
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Schedule 1
Current Landing Points of the FLAG Cable System
Porthcurno, UK
Estepona, Spain
Palermo, Italy
Alexandria, Egypt
Port Said, Egypt
Fujairah, UAE
Mumbai, India
Penang, Malaysia
Songhkla, Thailand
Hong Kong, China
Shanghai, China
Keoje, Korea
Miura, Japan
Ninomiya, Japan
In addition, Jeddah, Saudi Arabia and Aqaba, Jordan are scheduled to be
operational in June and July 1999, respectively.
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Schedule 2
1. Purchaser shall pay to FLAG on activated Capacity Purchaser's pro rata share
of the actual incremental cost (including but not limited to the cost of
spares used) incurred by FLAG in carrying out a repair of the FLAG Cable
System ("Running Costs").
FLAG shall render invoices for Purchaser's share of Running Costs at such
times as it renders invoices for other parties' shares of such Running
Costs.
2. Purchaser shall pay directly to the relevant landing party, or reimburse
FLAG for, the following amounts charged by each landing party that owns a
landing station in which the activated Capacity enters the FLAG Cable
System, in each case with respect to such Capacity:
(a) Landing station access charges; and
(b) Periodic landing station maintenance charges.
If Purchaser is to reimburse FLAG for such charges, FLAG shall render
Purchaser an invoice therefor as and when it is invoiced by the relevant
landing party.
3. Purchaser shall pay each invoice within 30 days after receipt by Purchaser.
4. If Purchaser requires restoration for any of the Capacity, FLAG shall
arrange such restoration and charge Purchaser therefor in accordance with
FLAG's restoration policies and procedures. FLAG shall advise Purchaser when
Purchaser must notify FLAG of Purchaser's restoration requirements.
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