Exhibit 10.7
ML&B DRAFT 12/18/99
VI B. (14)(b)
MARKETING TRANSITION AGREEMENT
This Marketing Transition Agreement is entered into this 14th day of May, 1998
(the "Effective Date") by and between Xxxx Atlantic Network Systems (Bermuda)
Limited, formerly NNS (Bermuda) Limited, a Bermuda corporation with offices at
The Emporium Xxxxxxxx, 00 Xxxxx Xxxxxx - Fourth Floor, Xxxxxxxx HM12, Bermuda
("BANSB"), NYNEX Network Systems Company, a Delaware Corporation with offices at
0 Xxxx Xxx Xxx Xxxx, Xxxxx Xxxxxx, Xxx Xxxx 00000 ("NNS") and FLAG Limited, a
Bermuda Corporation with offices at Richmond House, 00 Xxx-xx- Xxxxx Xxxx,
Xxxxxxxx, XX00, Xxxxxxx ("XXXX"). BANSB, NNS and FLAG are hereinafter also
referred to individually as "Party" and collectively as the "Parties."
RECITALS
WHEREAS, On April 19, 1994, BANSB and FLAG entered into a Marketing Services
Agreement (the "Agreement"), pursuant to which BANSB secured the exclusive right
to provide certain marketing services for FLAG for the operating life of the
FLAG cable (the "Marketing Services"); and
WHEREAS, with the closure of FLAG's permanent financing and movement to an
operating entity, FLAG believes that it is now better positioned to devote its
attention to the marketing and sale of
FLAG capacity and BANSB is willing to transition its obligations under the
Agreement to FLAG; and
WHEREAS, FLAG and BANSB desire to describe the terms and conditions under which
an orderly transition of BANSB's obligations under the Agreement to FLAG should
occur, with such terms and conditions including, INTER ALIA, (i) a discussion of
how FLAG intends to market and sell FLAG capacity, (ii) an implementation plan
for the transition of BANSB functions to FLAG in a manner that is seamless to
the industry, (iii) various payments to BANSB, and (iv) the continued
involvement of NNS in the activities of FLAG, in recognition of Xxxx Atlantic
Corporation's strategic importance as not only FLAG's largest investor but as
one of the largest telecommunications companies in the world.
NOW, THERFORE, in consideration of the mutual promises set forth herein, the
Parties agree as follows:
1. TRANSITION
(a) The Agreement shall terminate on the seventh day after the
Effective Date (the "Termination Date"). In advance of said Termination
Date, the Parties agree that continuity and stability are essential if
the sales, marketing and support functions presently being performed by
BANSB are to be transitioned to FLAG in an orderly and efficient
manner. The Parties shall jointly develop a transition plan aimed at
completing the transition by the
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Termination Date in a manner that is transparent to the customer.
During this transition period, BANSB will cooperate to implement with
FLAG personnel decisions of FLAG regarding the personnel named on
Schedule 1 hereto. BANSB and FLAG will use best efforts to ensure all
sales related processes necessary to accomplish a smooth transition
will be in place prior to the Termination Date. Without limiting the
generality of the foregoing, BANSB will transfer to FLAG in a timely
manner all operating procedures and work product in a usable manner and
will provide FLAG-designated personnel with appropriate orientation.
All costs accruing after the Termination Date with respect to BANSB
personnel who transfer to FLAG will become the obligation of FLAG,
other than commissions on sales for which FLAG must pay commissions to
BANSB.
(b) All expenses associated with the transition of BANSB obligations to
FLAG ("Transition Expenses") up to the amount set forth in Schedule 2
hereto, shall be paid by FLAG, provided that Transition Expenses shall
not include expenses (other than overhead set forth in Schedule 2
between the Effective Date and the Termination Date) to be agreed upon
by the Parties which would in any event have been incurred by BANSB
even without such transition. These Transition Expenses include, INTER
ALIA, the costs associated with (i) consultant terminations (severance
costs associated with consultants will be determined by reference to
that consultant's contract and paid by FLAG and will include those
consultants who are offered a position with FLAG but who determine not
to join FLAG), (ii) BANSB employee terminations (severance costs
associated with BANSB employees will be determined by BANSB and FLAG),
(iii) lease terminations in Bermuda (both the Front
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Street office as well as apartment leases of specified BANSB personnel)
and Hong Kong, (iv) equipment leases, (v) the costs associated with the
closure of BANSB's Amsterdam and Hong Kong office, and (vi) losses on
the disposal of certain fixed assets calculated by reference to said
assets written down value. Beyond the amounts described in Section 2,
FLAG shall have no responsibility for any expenses associated with the
winding up of BANSB and BANSB will indemnify and hold harmless FLAG
from any additional Transition Expenses and causes of action relating
thereto.
(c) Although there is no right of assignment under the various
consultant agreements that BANSB has with its sales force, BANSB will
work with FLAG in an effort to secure such assignment to FLAG, if FLAG
so requests, but FLAG will have no obligation to take over any such
agreements.
(d) FLAG shall identify those BANSB and NNS employees that FLAG wishes
to have in its organization. BANSB and NNS will work with FLAG and
these employees to attempt to secure the most appropriate arrangement,
either through secondment or direct hire by FLAG.
(e) FLAG and BANSB will use best efforts to minimize Transition
Expenses. Without limiting the generality of the foregoing, BANSB will
act promptly in issuing notices of termination of relevant agreements
and other arrangements.
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(f) Neither BANSB nor any of the BANSB personnel will incur any
obligations or take any other actions for which FLAG could be liable
without FLAG's prior written consent.
2. XXXX ATLANTIC SERVICES
(a) BANSB and NNS are affiliates of Xxxx Atlantic Corporation ("Xxxx
Atlantic"). Recognizing Xxxx Atlantic's position as one of the largest
telecommunication companies in the owrld, FLAG and NNS will work
together after the termination of the Agreement to jointly secure the
objectives of FLAG. NNS's work with FLAG (hereinafter, "Xxxx Atlantic
Services"), shall include, but not be limited to, (i) working together
to secure commitments from telecommunications carriers for capacity,
(ii) working together on strategic initiatives, including new products,
services and pricing, (iii) providing input to FLAG on industry trends
and evaluating the impact of those trends on FLAG, (iv) providing
technical support to FLAG, (v) providing legal and regulatory support
as needed, and (vi) providing communications support.
(b) The Chief Executive Officer of FLAG and a designee of NNS shall
discuss the Xxxx Atlantic Services and other ways for Xxxx Atlantic to
assist FLAG in achieving its goals once every two weeks.
(c) FLAG shall provide monthly reports to NNS and the Board of
Directors of FLAG (the "FLAG Board") regarding the marketing activities
performed by FLAG and the amount of capacity on the FLAG cable for
which forecasts or commitments have been received.
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Such reports shall be in such form and contain such details as may
reasonably requested by NNS or the FLAG Board, and shall include
tracking for prospective customers, including size, close date and
probability of success. FLAG shall keep detailed records of all
material activities performed in relation to the provision of marketing
services and on reasonable notice, FLAG shall make the same available
for inspection by the FLAG Board. NNS shall provide monthly reports to
FLAG regarding the Xxxx Atlantic Services. NNS shall keep detailed
records of such Xxxx Atlantic Services and, on reasonable notice, shall
make the same available for inspection by FLAG.
(d) FLAG shall maintain records of all Xxxx Atlantic Services performed
by NNS or an affiliate. For incidental services (E.G., setting up an
Embassy meeting or discussing market conditions) NNS will not xxxx
FLAG. For any longer term, discrete work efforts performed by NNS for
FLAG, FLAG shall reimburse NNS for all costs and out-of-pocket expenses
incurred by NNS. Costs associated with these discrete work efforts will
be agreed upon in writing, in advance by FLAG and NNS.
(e) The Chief Executive Officer of FLAG, one representative from NNS
and one representative from the FLAG Board will form a Committee (the
"Goals and Objectives Committee") to provide guidance to FLAG
management on strategic matters relating to the marketing and sale of
FLAG capacity. FLAG management shall discuss all material strategic and
pricing matters which require FLAG Board approval with the Goals and
Objectives Committee in advance of presentation to the Board.
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(f) NNS shall be and shall serve as an independent contractor. Neither
FLAG on the one hand, nor NNS, on the other hand, shall have any
authority to bind or commit the other or to represent itself as an
agent of the other.
3. BANSB COMMISSION
Consistent with Section 2 of the Agreement, BANSB shall be entitled to
all commissions due and owing, to the extent that a capacity sales
and/or credit agreement has been executed by the Effective Date. In
addition, with respect to capacity sales and/or credit agreements which
have been executed by the Effective Date, and under which FLAG has the
right to render invoices after the Effective Date, BANSB will be
entitled to commissions on the cash amount payable under each such
invoice which may be rendered by FLAG within twenty four (24) months
after the Effective Date. BANSB will also be entitled to commissions,
up to a maximum of $3,000,000, of 3% of the cash amount payable by any
carriers set forth in Schedule 3 hereto under invoices which FLAG may
render within one year after the Effective Date under capacity sales
and/or credit agreements executed by FLAG with such carriers within
such one year period. Except as provided for in this Section, BANSB
shall not be entitled to any commissions under the Agreement or this
Marketing Transition Agreement.
4. SALES AGENT
(a) The Parties recognize that BANSB will be transferring to FLAG its
rights and obligations under the Agreement just at a time when the FLAG
system has become
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opreational and before BANSB, as sales agent, has an opportunity to
gain significant strategic value and enjoy xxxxxx exposure in the
marketplace.
(b) As of the Termination Date, BANSB or an affiliate of BANSB shall,
for the life of the FLAG system, be FLAG's non-exclusive sales agent
for the sale of four ("4") whole DS- 3s or, in the aggregate, 84 E-1s
of capacity on the FLAG system from the United Kingdom to Japan. The
total bandwidth provided may be dividable across any combination of
terminal pairs. BANSB shall bear any and all expenses associated with
the marketing of these four DS-3s. FLAG shall have the right to accept
or reject any offers to purchase capacity ("purchase" being defined
under the Agreement) which are presented by BANSB to FLAG, but FLAG
shall not unreasonably refuse to accept such offers. FLAG and BANSB
shall divide equally the net sale proceeds of the purchase price from
any such sale of capacity. No additional commission will be earned
pursuant to Section 3 of this Marketing Transition Agreement with
respect to any capacity sold pursuant to this Section 4. The marketing
activities as to the four DS-3s will be coordinated with FLAG.
5. OUTSTANDING BILLS
There are certain outstanding bills (the "Outstanding Bills") that
BANSB or NNS have sought payment from FLAG. These Outstanding Bills
include, INTER ALIA (i) certain publicity, and promotional work
performed for FLAG, (ii) legal fees from the firm of Xxxx, Weiss,
Rifkind, Xxxxxxx and Xxxxxxxx, and (iii) miscellaneous expenses
associated with the Program Management Services Agreement between FLAG
and NNS. In full settlement of
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these Outstanding Bills, FLAG will make a payment to BANSB on the
Effective Date of $750,000.
6. RELEASE
(a) FLAG, on behalf of itself, FLAG's shareholders, its heirs, legal
representatives, subsidiaries and assigns agrees not to xxx and does
hereby release and forever discharge BANSB and its subsidiaries and
affiliates, successors and assigns, and their past and present
officers, directors, employees, agents, and the heirs, legal
representatives and assigns of any of said persons (the "BANSB
Releases") of and from any and all, and all manner of, actions and
causes of action, suit, debts, dues, expenses, accounts, bonds,
covenants, agreements, judgments, claims, damages, counterclaims and
demands whatsoever, in law or equity, that FLAG and its shareholders
had, have, or may have against the BANSB Releasees based upon the
Agreement and the performance of the BANSB Releasees thereunder, with
the exception of those actions and causes of action, suit, debts, dues,
expenses, accounts, bonds, covenants, agreements, judgments, claims,
damages, counterclaims and demands which arise from the gross
negligence or willful misconduct of BANSB.
(b) BANSB on behalf of itself, BANSB's Shareholder, its heirs, legal
representatives, affiliates, parent company, subsidiary and assigns
agrees not to xxx and does hereby release and forever discharge (i)
FLAG and its subsidiaries and affiliates, successors and assigns, (ii)
the Administrative Agent, the Collateral Trustee and the Lenders from
time to time
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parties to the Credit Agreement dated as of January 28, 1998 among
FLAG, the Administrative Agent, the Collateral Trustee and the Lenders
(the "Credit Agreement"), and (iii) their past and present officers,
directors, employees, agents, and the heirs, legal representatives and
assigns of any of said persons (the "FLAG Releasees") of an from any
and all, and all manner of, actions and causes of action, suit, debts,
dues, expenses, accounts, bonds, covenants, agreements, judgments,
claims, damages, counterclaims and demands whatsoever, in law or
equity, that BANSB had, has, or may have against the FLAG Releasees
based upon the Agreement and the performance of the FLAG Releasees
thereunder, with the exception of those actions and causes of action,
suit, debts, dues, expenses, accounts, bonds, covenants, agreements,
judgments, claims, damages, counterclaims and demands which arise from
the gross negligence or willful misconduct of FLAG.
7. REPRESENTATIONS
The signatories represent that they have been granted by their
respective principals full power and authority to compromise and settle
all claims related to the Agreement, to agree to the confidentiality
provisions herein and to execute this Marketing Transition Agreement.
8. CONFIDENTIALITY
It is understood and mutually agreed that:
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(a) Except as required by law, the Parties shall keep strictly
confidential this Marketing Transition Agreement, any facts, claims,
allegations or terms and conditions relating to all or a part of this
Marketing Transition Agreement, any statements, negotiations,
proceedings or opinions in connection therewith and any information
made available by one Party to another Party pursuant to the terms of
this Marketing Transition Agreement;
(b) Except as required by law or regulation, no Party will seek or
create any publicity or make any statement to anyone concerning the
other Parties to this Marketing Transition Agreement or any of their
affiliates, or present or former officers, directors, employees or
agents;
(c) The restrictions under clauses (a) and (b) immediately above shall
not apply to the Administrative Agent, the Collateral Trustee and the
Lenders from time to time parties to the Credit Agreement dated as of
January 28, 1998 among FLAG, the Administrative Agent, the Collateral
Trustee and the Lenders; and
(d) Any press releases concerning this Marketing Transition Agreement
must be reviewed in advance and approved by both FLAG and BANSB.
9. ORAL MODIFICATIONS
This Marketing Transition Agreement may not be changed orally.
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10. GOVERNING LAW
This Marketing Transition Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of laws thereof.
11. SURVIVAL
Obligations under this Marketing Transition Agreement which, by their
nature, would continue beyond the termination of this Marketing
Transition Agreement, shall survive such termination.
12. WAIVER
The failure of any Party to exercise any right provided for herein
shall not be deemed a waiver of such right and the wiaver of any right
provided for herein shall not be deemed a waiver of any other right
hereunder.
13. BINDING NATURE
This Marketing Transition Agreement shall be binding upon, and inure to
the benefit of, each of the Parties and their respective successors and
permitted assigns, provided that no Party may assign this Marketing
Transition Agreement without the prior written consent of the other
Parties, and any attempted assignment without such consent shall be
null and void; provided, further, however, that FLAG may pledge and
assign this marketing Transition Agreement to the Collateral Trustee
for the benefit of the Secured Parties, as defined in the
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Credit Agreement. Nothing contained in this Marketing Transition
Agreement, express or implied, shall be deemed to confer any right or
remedy upon, or obligate any Party to, any person or entity other than
the Parties. Notwithstanding the foregoing, and consistent with Section
6.11 of the Credit Agreement, in the event that the Majority Lenders
(as defined under the Credit Agreement) do not find this Marketing
Transition Agreement reasonably satisfactory, then the Parties shall
jointly take such action as is necessary to satisfy said Majority
Lenders.
14. ENFORCEABILITY
If any term in or provision of this Marketing Transition Agreement
shall be held to be illegal, invalid or unenforceable, in whole or in
part, under any applicable enactment or rule of law, such term or
provision or part thereof shall to that extent be deemed not to form
part of this Marketing Transition Agreement and the validity and
enforceability of the remainder of this Marketing Transition Agreement
shall not be affected. The Parties undertake in good faith to replace
any invalid or unenforceable provision with one which leads to the same
economic result.
15. NOTICES
Any notices required or permitted to be sent under this Marketing
Transition Agreement shall be sent by registered mail, return receipt
requested or by express mail, telecopy, or hand delivery to the address
of the Party in this Section. Notices sent by registered mail shall be
deemed effective on the third business day following mailing and if
sent by express mail,
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telecopied, or hand delivered, shall be deemed effective on receipt.
Any Party may change its address and/or recipient for notices by
notifying the other Party in accordance with this Section.
Any notice required to be delivered to BANSB or NNS shall be sent to:
NYNEX Network Systems Company
Attn: Senior Vice President
0 Xxxx Xxx Xxx Xxxx
Xxxxx Xxxxxx, XX 00000
Facsimile: 000-000-0000
With a copy to:
Xxxx Atlantic
Legal Department
Attn: Xxxxxxx X. Xxxxxx, Esq.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
Any notice required to be delivered to FLAG shall be sent to:
FLAG Limited
Xxxxxxxx Xxxxx
00 Xxx-xx-Xxxxx Xxxx
Xxxxxxxx XX00 Xxxxxxx
Attention: Chief Executive Officer
16. COUNTERPARTS
This Marketing Transition Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the Parties have caused this Marketing Transition Agreement
to be executed by their duly authorized representatives effective as of the day
and year first above written.
FLAG Limited Xxxx Atlantic Network Network Systems
(Bermuda) Limited
By: /s/ Xxxxxx Bande By: /s/ Xxxx X. Xxxxx
------------------------------- --------------------------------
Xxxxxx Bande Xxxx X. Xxxxx
Chief Executive Officer President
NYNEX Network Systems Company
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx
Authorized Signator
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