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EXHIBIT 10.31
19/11/98
ATLANTIC CROSSING/AC-1
SUBMARINE CABLE SYSTEM
CAPACITY PURCHASE AGREEMENT
THIS AGREEMENT (as amended, supplemented or otherwise modified from time
to time, this "Agreement"), made and entered into as of this 23 day of Dec.,
1998 between ATLANTIC CROSSING LTD., a corporation organized and existing under
the laws of Bermuda and having its principal office in Bermuda (the "Grantor"),
and ABOVE NET COMMUNICATIONS INC. a corporation organized and existing under
the laws of Delaware and having its principal office at 00 Xxxx Xxx Xxxxxxxx,
Xxxxx 0X00, Xxx Xxxx, Xxxxxxxxxx 00000, XXX (the "Purchaser).
WITNESSETH:
WHEREAS, the Grantor, (formerly known as Global Telesystems Ltd.),
certain of its subsidiaries, SSI Atlantic Crossing LLC and AT&T Submarine
Systems, Inc., now known as Tyco Submarine Systems Ltd. (together with its
successors and assigns, "TSSL") have entered into the Project Development and
Construction Contract, dated March 18, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Supply Contract"), pursuant to which
TSSL has agreed to design, manufacture, construct, install and deliver a fiber
optic cable system connecting (a) the United States to the United Kingdom, (b)
the United Kingdom to the Netherlands, (c) the Netherlands to Germany and (d)
Germany to the United States (the "System");
WHEREAS, the Grantor, certain of its subsidiaries, SSI Atlantic Crossing
LLC and TSSL have also entered into the Operations, Administration and
Maintenance Agreement, dated as of March 25, 1997 (as amended, supplemented or
otherwise modified from time to time, the "OA&M Agreement"), pursuant to which
TSSL has agreed, in accordance with the terms thereof, to operate, administer
and maintain the System;
WHEREAS, the Purchaser desires to acquire rights with respect to the
Purchased Capacity (as defined herein) on an indefeasible right of use basis
("IRU") and such Purchased Capacity represents capacity on the System between
the System Interface (as defined herein) of the applicable cable stations;
WHEREAS, the Grantor is willing to grant such rights on an IRU basis;
WHEREAS, the Purchased Capacity is comprised of: (a) S Capacity (as
defined herein), which will be conveyed by the Grantor to the Purchaser pursuant
to this Agreement; and (b) to the extent necessary to allow the Purchaser to use
its IRU in the applicable S Capacity, T Capacity (as defined herein), which will
be conveyed by subsidiaries of the Grantor to the Purchaser pursuant to the
Indefeasible Right of Use Agreement, attached hereto as Annex A; and
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WHEREAS, in order to obtain inland connection services in the United
States and the United Kingdom for the purpose of extending the Purchased
Capacity inland to a location in New York City and London (the "Inland
Capacity"), the Purchaser has the option of entering into separate agreements
(the "Inland Capacity Agreements") with subsidiaries or affiliates of the
Grantor located in the United States and the United Kingdom (the "Inland
Affiliates");
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants contained herein, covenant and agree with each other as follows:
1. DEFINITIONS. Terms defined in the preamble, in the recitals and Annex B
hereto shall have their respective meanings when used herein and the
following terms shall have the following meanings:
"Access Connection" as defined in Annex B to this Agreement.
"Adjusted Pro Rata Share" as defined in Annex B to this Agreement.
"Advisory Committee" as defined in Paragraph 5 of Annex B to this
Agreement.
"business day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City or Bermuda are authorized or
required to close.
"Dollars" or "$" means United States dollars.
"European Segment" means Segment X-0x, X-0x and/or S-3c.
"Grantor's Account" means the bank account of the Grantor maintained
with Deutsche Bank AG, Now York Branch, at 00 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (account number 10-533026-0016) or such other
account as the Grantor may designate to the Purchaser in writing. Wire
instructions for the above-referenced account are as follows:
Account Name: Atlantic Crossing Ltd.
Account Number: 00-000000-0000
Bank Name: Deutsche Bank AG, New York Branch
ABA No.: 000-000-000
Reference: Atlantic Crossing Attn: Xxxxx Xxxxxxxxx
"Maintenance Costs" as defined in Section 4(a) of this Agreement.
"Minimum Capacity Unit" or "MCU means the minimum capacity to be
purchased by the Purchaser in the System [*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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"Operator" means TSSL and its successors and assigns as operator under
the OA&M Agreement or any successor operator of the System appointed by
Grantor.
"Payment Date" means, with respect to the IRU granted in respect of any
Purchased Capacity, the date on which the Purchaser pays the Grantor
(for the benefit of the Grantor and the benefit of the Subsidiary
Grantors), in immediately available Dollars, the amount required to be
paid by the Purchaser for such Purchased Capacity in accordance with
Section 3(b) of this Agreement,
"Payment Due Date" means, with respect to the IRU granted in respect of
any Purchased Capacity on Segment S-1 the date set forth under the
heading "Payment Due Date" on Schedule I and in respect of any other
Purchased Capacity, the RFS Date for such Purchased Capacity, provided
that, save in respect of Segment S-1, the Purchaser shall have received
a written certification from the Grantor at least thirty (30) days prior
thereto certifying that, in its good faith judgment, the RFS Date for
such Purchased Capacity will occur by the date specified therein,
accompanied by an invoice(s) for the amount due on such date in
accordance with Section 3(b) of this Agreement.
"Presale Purchaser" means any purchaser who acquires an IRU in capacity
on a Transatlantic Segment from the Grantor which was contracted for
prior to the earlier of (x) the RFS Date for the entire System and (y)
November 30, 1998.
"Purchased Capacity" means the S Capacity set forth on Schedule I
hereto, together with to the extent necessary to allow the Purchaser to
use its IRU in the applicable S Capacity, the applicable T Capacity.
"Purchase Price" means, with respect to the IRU granted in respect of
any Purchased Capacity, the amount payable by the Purchaser to the
Grantor (for the benefit of the Grantor and the benefit of the
Subsidiary Grantors) in respect of such Purchased Capacity and set forth
under the heading "Purchase Price" on Schedule I to this Agreement.
"Residual Capacity" means the Segment S-1 Residual Capacity, the Segment
S-2 Residual Capacity, the Segment S-3a Residual Capacity, the Segment
S-3b Residual Capacity, the Segment S-3c Residual Capacity and the
Segment S-4 Residual Capacity.
"RFS Date" means, with respect to any Segment, the date on which such
Segment will be available for service, which shall be the date on which
the Grantor certifies that (i) such Segment has achieved the standard
described in Attachment 4 to Annex B hereto, (ii) such Segment has been
accepted by Grantor as ready for commercial service under the Supply
Contract and (iii) the independent engineer engaged by Grantor's senior
lenders has concurred with such acceptance. The RFS Date for Segment S-1
(and the related T Segments) was May 22, 1998. The anticipated RFS Date
for Segment S-2 is November 30, 1998. The anticipated
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RFS Date for Segment S-3a, Segment S-3b, Segment S-3c, Segment S-4 and
the entire System is February 22, 1999. The foregoing dates, save for
that with respect to Segment S- 1, are merely estimates as of the date
hereof and shall not be deemed to be representations, covenants or
conditions to obligations.
"Right of Use Agreement" means the Indefeasible Right of Use Agreement,
dated as of the date hereof, made by GT Landing Corp., GT U.K. Ltd.,
Global Telesystems GmbH and GT Netherlands B.V. in favor of purchasers
of capacity on the System (including the Purchaser) and attached as
Annex A to this Agreement, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with
Paragraph 9 thereof.
"S Capacity" means capacity on the System available on any S Segment.
"S Segments" the collective reference to Segment X-0, X-0 and X-0x,
X-0x, X-0x and S-4, as necessary.
"Segment S-l" as defined in Annex B to this Agreement.
"Segment S-1 Residual Capacity" as defined in Annex B to this Agreement.
"Segment S-2" as defined in Annex B to this Agreement.
"Segment S-2 Residual Capacity" as defined in Annex B to this Agreement.
"Segment S-3a" as defined in Annex B to this Agreement.
"Segment S-3a Residual Capacity" as defined in Annex B to this
Agreement,
"Segment S-3b" as defined in Annex B to this Agreement.
"Segment S-3b Residual Capacity" as defined in Annex B to this
Agreement.
"Segment S-3c" as defined in Annex B to this Agreement.
"Segment S-3c Residual Capacity" as defined in Annex B to this
Agreement.
"Segment S4" as defined in Annex B to this Agreement.
"Segment S-4 Residual Capacity" as defined in Annex B to this Agreement.
"Segment T-l" as defined in Annex B to this Agreement.
"Segment T-2" as defined in Annex B to this Agreement.
"Segment T-3 as defined in Annex B to this Agreement.
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"Segment T4" as defined in Annex B to this Agreement.
"Segments" the collective reference to the S Segments and the T
Segments.
"Stub Period" as defined in Section 4(a) hereof
"Subsidiary Grantors" the collective reference to GT Landing Corp., GT
U.K. Ltd., Global Telesystems GmbH and GT Netherlands B.V. each a
wholly-owned subsidiary of the Grantor.
"Supplier" means TSSL and its successors and assigns as contractor under
the Supply Contract or any successor contractor of the System appointed
by Grantor.
"T Capacity" means capacity on the System available on any T Segment.
"T Segments" the collective reference to Segment T-1, T-2, T-3 and T-4.
"Transatlantic Segment" means Segment X-0, X-0 or S-4.
"Total Purchase Price" means the aggregate amount payable by the
Purchaser to the Grantor (for the benefit of the Grantor and the benefit
of the Subsidiary Grantors) for the IRU of the Purchased Capacity as set
forth on the bottom of Schedule I to this Agreement opposite the phrase
"Total Purchase Price."
2. IRU FOR PURCHASED CAPACITY.
(a) Purchase Agreement and Grant of IRU. Purchaser hereby agrees to
purchase MCU(s) of Purchased Capacity on the terms and
conditions set forth herein and under the Right of Use
Agreement. Effective on the Payment Date, the Grantor, together
with the applicable Subsidiary Grantors pursuant to the Right of
Use Agreement, grants to the Purchaser, for the term of this
Agreement, an IRU in the Purchased Capacity for which payment
has been made in accordance with Section 3(b) of this Agreement.
Each purchase and grant of the IRU in the Purchased Capacity
takes place in Bermuda.
(b) Annex B. Certain rights and obligations with respect to the IRU
of the Purchased Capacity are described in Annex B hereto, which
is incorporated herein by reference.
(c) Residual Capacity. If the Purchaser is a Presale Purchaser,
then, effective on the date which is 12-1/2 years after the RFS
Date for the entire System, the Grantor, together with the
applicable Subsidiary Grantors pursuant to the Right of Use
Agreement, grants to the Purchaser, at no additional charge and
for the term of this Agreement, an IRU in (i) the Purchaser's
Adjusted Pro Rata Share of the Segment S-1 Residual Capacity,
(ii) the Purchaser's Adjusted Pro Rata Share of
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the Segment S-2 Residual Capacity, (iii) the Purchaser's
Adjusted Pro Rata Share of the Segment S-3a Residual Capacity,
(iv) the Purchaser's Adjusted Pro Rata Share of Segment S-3b
Residual Capacity, (v) the Purchaser's Adjusted Pro Rata Share
of Segment S-3c Residual Capacity and (vi) the Purchaser's
Adjusted Pro Rata Share of Segment S-4 Residual Capacity. The
Grantor shall promptly notify the Purchaser of the amount of
capacity in which the Purchaser obtained an IRU pursuant to this
Section 2(c). If the Purchaser acquires an IRU in any Residual
Capacity, the terms contained herein binding on the Purchaser
with respect to Purchased Capacity shall be binding on the
Purchaser with respect to such Residual Capacity. The
Purchaser's Adjusted Pro Rata Share in any S Segment shall be
allocated in half MCUs, and the Grantor shall be permitted to
round down to the nearest whole MCU.
(d) Presale Upgrade Rights. In addition, if the Grantor and the
Subsidiary Grantors determine to increase the Initial Design
Capacity of the System after the date which is 12-1/2 years
after the RFS Date for the entire System, the Grantor shall
deliver to the Purchaser (only if the Purchaser is a Presale
Purchaser) notice of the proposed increase. If the Purchaser is
a Presale Purchaser, the Purchaser will have the right to
receive a portion of such increased capacity, on terms to be
provided at that time.
3. PAYMENT FOR CAPACITY.
(a) Initial Payment. Upon the execution and delivery of this
Agreement, the Purchaser shall make an initial payment to the
Grantor's Account (for the benefit of the Grantor and the
benefit of the Subsidiary Grantors), in immediately available
Dollars, in an amount equal to 10% of the Total Purchase Price
(the "Initial Payment"). The Initial Payment shall be
non-refundable (except as provided in Section 21 of this
Agreement) and shall be credited toward the payment of the Total
Purchase Price.
(b) Payment of Purchase Price. In exchange for the IRU interest
granted pursuant to this Agreement and the Right of Use
Agreement in any Purchased Capacity, the Purchaser shall, on or
before the Payment Due Date, pay to the Grantor's Account (for
the benefit of the Grantor and the benefit of the Subsidiary
Grantors ), in immediately available Dollars, an amount equal to
the Purchase Price; provided, however, the aggregate payments
made by the Purchaser under paragraphs (a) and (b) of this
Section 3 shall not exceed the Total Purchase Price. Each
payment made under this Section 3(b) shall be non-refundable.
(c) Additional Service Payment. The Purchaser shall be required to
make, at the request of the Grantor, additional payments in
respect of the right of use granted under this Agreement, or the
Right of Use Agreement, for access connection rearrangement
requested by the Purchaser as set forth in Schedule II to this
Agreement and such other reasonable costs in respect of
additional services or equipment to be provided hereunder or in
connection herewith.
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(d) Taxes. All payments made by the Purchaser under this Section 3
shall be made without any deduction or withholding for or on
account of any tax, duty or other charges of whatever nature
imposed by any taxing or governmental authority (collectively
"Taxes"). If the Purchaser is or was required by law to make any
deduction or withholding from any payment due hereunder to the
Grantor (for the benefit of the Grantor and the benefit of the
Subsidiary Grantors ), then, notwithstanding anything to the
contrary contained in this Agreement, the gross amount payable
by the Purchaser to the Grantor (for the benefit of the Grantor
and the benefit of the Subsidiary Grantors) will be increased so
that, after any such deduction or withholding for Taxes, the net
amount received by the Grantor (for the benefit of the Grantor
and the benefit of the Subsidiary Grantors) will not be less
than the Grantor (for the benefit of the Grantor and the benefit
of the Subsidiary Grantors) would have received had no such
deduction or withholding been required. If any taxing or
government authority asserts that the Purchaser should have made
a deduction or withholding for on account of any Taxes with
respect to all or a portion of any payment made hereunder, the
Purchaser hereby agrees to indemnify the Grantor for such Taxes
and hold the Grantor harmless on an after-tax basis from and
against any Taxes, interest or penalties levied or asserted in
connection therewith.
4. OPERATION AND MAINTENANCE OF SYSTEM.
(a) Maintenance Payments. The Purchaser shall pay to the Grantor
(for the benefit of the Grantor and the benefit of the
Subsidiary Grantors), in immediately available Dollars, amounts
("Maintenance Cost") which are based on its allocated share of
the costs for operating, maintaining and repairing the System in
accordance with Paragraph 8 of Annex B. Maintenance Costs shall
be payable quarterly in advance on each January 1, April 1, July
1 and October 1, commencing with the first January 1 after the
applicable Payment Due Date, except that on the applicable
Payment Due Date for the Purchased Capacity the Purchaser shall
make a proportional payment for the period (the "Stub Period")
from the applicable Payment Due Date to the first January 1
thereafter. Each payment made by the Purchaser under this
Section shall be subject to the provisions of Section 3(d) of
this Agreement and shall be non-refundable.
(b) Maintenance. (i) The Grantor shall use reasonable efforts to
cause the System to be maintained in efficient working order and
in accordance with industry standards. The Grantor represents
that the OA&M Agreement is in full force and effect and that it
requires and at all times shall require TSSL to provide routine,
preventive and corrective maintenance for the System in
accordance with performance standards that at least meet prudent
industry standards. Grantor will use reasonable commercial
efforts to cause TSSL to perform its obligations under the OA&M
Agreement and the Supply Contract.
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(ii) The Grantor together with the Subsidiary Grantors will
have sole responsibility for negotiating, executing and
administering contracts and all other aspects related to
the construction, operation, maintenance and repair of
the System.
(iii) Should any condition exist in any Segment that may
impair the integrity of the System, the Grantor shall
initiate and coordinate planned maintenance (or shall
cause such action to occur), on such relevant Segment
which may include the deactivation of such Segment. The
Grantor shall, to the extent reasonably practicable,
advise the Purchaser in writing at least sixty (60) days
(or such shorter period as may be necessary), prior to
initiating a planned maintenance operation, of the
timing, scope and costs of such planned maintenance
operation.
(iv) In the event of disruption of service due to force
majeure or other emergency, the Grantor shall cause
service to be restored as quickly as reasonably
possible, and the Grantor shall take such measures as
are reasonably necessary to obtain such objective.
5. INVOICES; DEFAULT INTEREST.
(a) Invoices. The Grantor (and/or the Subsidiary Grantors) or its
authorized agent (which may include the Operator), shall render
invoices under this Agreement in Dollars, and the Purchaser
shall pay such amount in Dollars. The Purchaser shall make: all
payments by means of a wire transfer to Grantor's Account (for
the benefit of the Grantor and the Subsidiary Grantors). Any
payments required to be made pursuant to this Agreement shall,
save for the Initial Payment which shall be made in accordance
with the provisions of Section 3(a), be made on the later of (i)
the date when due or (ii) five (5) business days after an
invoice is received from Grantor by Purchaser.
(b) Default Interest. Any invoice rendered under this Agreement
which is not paid when due, shall accrue interest at the annual
rate of six percent (6%) above the rate for U.S. dollar LIBOR
for one month as quoted in The Wall Street Journal on the first
business day of the month in which such payment is due. Such
interest shall accrue from the day following the date payment
was due until it is paid in full. In the event that applicable
law does not allow the imposition of "default interest" at the
rate established in accordance with this Section 5(b), such
"default interest" shall be at the highest rate permitted by
applicable law. For purposes of this Section, "paid" shall mean
that funds are available for immediate use by the Grantor.
6. DEFAULT
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(a) If the Purchaser fails to make any payment required by this
Agreement on the date that it is due, or if the Purchaser is
otherwise in breach of this Agreement, and such payment default
continues unremedied for a period of at least five (5) days or
such other breach continues for a period of at least thirty (30)
days, the Grantor, or its authorized agent, may notify the
Purchaser in writing of such payment default or other breach and
if full payment is not received or such other breach is not
fully remedied within fifteen (15) days of such notification,
the Grantor: (i) may suspend all service provided to Purchaser
hereunder and under the Right of Use Agreement (including
suspending Purchaser's right to use the Purchased Capacity),
until such payment default or other breach has been cured
(including payment of default interest, if any) and (ii) shall
be entitled to pursue any and all rights and legal and equitable
remedies (including its rights and remedies to enforce the
Purchaser's obligations under this Agreement).
(b) If the Grantor is in breach of this Agreement and such breach
continues for a period of at least thirty (30) days, the
Purchaser may notify the Grantor in writing of such breach and
if such breach is not fully remedied within fifteen (15) days of
such notification, the Purchaser shall, for so long as such
breach continues, be entitled to pursue any and all rights and
legal and equitable remedies, including its rights and remedies
to enforce Grantor's obligations under this Agreement.
7. USE OF CAPACITY.
(a) The operation of the Purchased Capacity and any equipment
associated therewith shall be such as not to interrupt,
interfere with, or impair service over any of the facilities
comprising the System, or impair privacy of any communications
over such facilities, cause damage to plant or create hazards to
employees, affiliates or connecting companies of the Grantor,
any Subsidiary Grantor, the Purchaser, or any other user, owner
or operator of the System or the public. The Purchaser shall
bear the cost of any additional protective apparatus reasonably
required to be installed because of the use of such facilities
by the Purchaser, any lessees or permitted transferees of the
Purchaser, or any customer or customers of the Purchaser or of
any such lessee or transferee. The Grantor will use reasonable
efforts to cause all other purchasers of capacity in the System
to undertake obligations comparable to those of the Purchaser
set forth in this Section, and the Purchaser shall cause all
permitted users of the IRU in the Purchased Capacity to
undertake comparable obligations.
(b) The Purchased Capacity granted to the Purchaser shall be made
available to the Grantor (or its subsidiaries, its agents or the
Operator), at such times agreeable to the Purchaser and the
Grantor, to permit the Grantor and the Subsidiary Grantors to
conduct such tests and adjustments as may be necessary for such
capacity to be maintained in efficient working order.
8. DURATION OF AGREEMENT.
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(a) This Agreement shall become effective on the day and year set
forth in the preamble hereto and shall continue in operation
until the twenty-fifth (25th) anniversary of the RFS Date for
the System.
(b) The termination of this Agreement (whether under this Section or
otherwise) shall not relieve the Purchaser from any liabilities
arising prior to such termination.
(c) Upon the termination of this Agreement, so long as Purchaser is
not in default hereunder, the Purchaser may elect to extend its
rights in the System, for so long as the System exists or has
not been retired, by giving written notice to Grantor and paying
to Grantor one (1) Dollar. Such election to extend shall not
affect or delay the termination of the Grantor's obligations
under this Agreement. Upon such election to extend and payment,
the Purchaser, together with all other purchasers of capacity on
the System that also elect to so extend, shall become the sole
owners of the System. The ownership interests of the Purchaser
and such other purchasers shall be in proportion to the amount
of capacity covered by IRU's previously granted to the Purchaser
and such other purchasers. The Grantor shall execute and deliver
such documentation as may be reasonably required to effect such
transfer of ownership. Without limitation to the generality of
the foregoing provisions, Grantor shall have no obligation to
operate or maintain the System during such extension.
(d) The parties hereto shall discuss with each other and the other
purchasers of capacity on the System establishing a procedure
for the early retirement of the System if such retirement
appears to be commercially appropriate.
9. APPROVALS; LICENSES.
The performance of this Agreement by each party hereto is contingent upon the
obtaining and continuance of such approvals, consents, governmental
authorizations, licenses and permits as may be required or reasonably deemed
necessary by such party for performance by such party hereunder and as may be
satisfactory to it. The parties shall use (and in the case of the Grantor, shall
cause the Subsidiary Grantors to use) reasonable efforts to obtain and continue,
and to have continued, such approvals, consents, licenses and permits. No
license under patents is granted by the Grantor or any of the Subsidiary
Grantors or shall be implied or arise by estoppel in the Purchaser's favor with
respect to any apparatus, system or method used by the, Purchaser in connection
with the use of the capacity granted to it hereunder or under the Right of Use
Agreement.
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10. DISCLAIMER.
(a) The Grantor and the Subsidiary Grantors have entered into the
Supply Contract to obtain plant, equipment and services
necessary to allow the Purchased Capacity to be placed into
operation on the applicable scheduled RFS Date. Neither the
Grantor, any Subsidiary Grantor or any of their respective
affiliates warrants or guarantees that the RFS Date for any
Segment or the System will occur and the Grantor, the Subsidiary
Grantors and their respective affiliates will otherwise have no
obligation under this Agreement or the Right of Use Agreement or
otherwise unless and until the applicable RFS Date occurs. THE
PURCHASER ACKNOWLEDGES AND AGREES THAT THE GRANTOR AND THE
SUBSIDIARY GRANTORS ARE NOT LIABLE FOR THE SUPPLIER'S FAILURE TO
PERFORM. UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT, ANY
OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING BUT NOT
LIMITED TO, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE SPECIFICALLY DISCLAIMED.
(b) In order to make it more convenient for the Purchaser to connect
the Purchased Capacity to inland networks, the Grantor and the
Subsidiary Grantors have permitted certain Inland Carriers to
collocate at the cable stations located at each T Segment.
Neither the Grantor, any Subsidiary Grantor or any of their
respective affiliates warrants or guarantees any agreement
between the Purchaser and any Inland Carrier and neither the
Grantor, any Subsidiary Grantor or any of their respective
affiliates shall have any liability to the Purchaser for any
failure of any Inland Carrier to perform the terms and
conditions of any such agreement.
11. LIMITATIONS OF LIABILITY.
(a) Except as otherwise provided in this Agreement or in the Right
of Use Agreement, in no event shall the Purchaser, the Grantor
or any Subsidiary Grantor be liable to the other for
consequential, incidental, indirect or special damages,
including, but not limited to, loss of revenue, loss of business
opportunity, or the costs associated with the use of external
restoration facilities, including, without limitation, for any
loss or damage sustained by reason of any failure in or
breakdown of the System or the facilities associated with the
System, the failure of any Inland Carrier to perform the terms
and conditions of any agreement to which it and the Purchaser
are parties or for any interruption of service, whatever the
cause and however long it shall last.
(b) None of the parties shall be liable to any other party for any
loss or damage which may be suffered by such party by reason of
any circumstances beyond the control of the other parties and
having an adverse effect on the provision of any part of the
System in which the Purchaser is entitled to capacity or has any
other right or interest under this Agreement or under the Right
of Use Agreement.
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(c) (i) Neither the Grantor nor any Subsidiary Grantor shall be
liable to the Purchaser for any loss or damage which may be
suffered by the Purchaser as a result of, related to, or in
connection with, the Purchaser's compliance or non-compliance
with any applicable state, federal, foreign governmental,
international (foreign or domestic) or other law related to,
the transfer of the IRU in, or the use of, the Purchased
Capacity.
(ii) The Purchaser shall not be liable to the Grantor or any
Subsidiary Grantor for any loss or damage which may be suffered
by Grantor as a result of, related to, or in connection with,
Grantor's non-compliance with any applicable state, federal,
foreign governmental, international (foreign or domestic) or
other law related to the transfer by Grantor of the IRU to the
Purchaser in, or Grantor's operation, ownership or use of, the
System.
12. SETTLEMENT OF DISPUTES.
(a) The parties hereto shall endeavor to settle amicably by mutual
discussions any disputes, differences, or claims whatsoever
related to this Agreement.
(b) Failing such amicable settlement, any controversy, claim or
dispute arising under or relating to this Agreement, including
the existence, validity, interpretation, performance,
termination or breach thereof, shall finally be settled by
arbitration in accordance with the International Arbitration
Rules of the American Arbitration Association ("AAA"). There
shall be three (3) arbitrators (the "Arbitration Tribunal"), the
first of which shall be appointed by the claimant in its notice
of arbitration, the second of which shall be appointed by the
respondent within thirty (30) days of the appointment of the
first arbitrator and the third of which shall be jointly
appointed by the party-appointed arbitrators within thirty (30)
days thereafter. The language of the arbitration shall be
English. The Arbitration Tribunal will not have authority to
award punitive damages to either party. Each party shall bear
its own expenses, but the parties shall share equally the
expenses of the Arbitration Tribunal and the AAA. This Agreement
shall be enforceable, and any arbitration award shall be final,
and judgment thereon may be entered in any court of competent
jurisdiction. The arbitration shall be held in New York, New
York, USA.
13. INCREASE OF INITIAL DESIGN CAPACITY.
The Grantor and the Subsidiary Grantors shall have authority to
increase, at their own cost and expense, the Initial Design Capacity of
the System.
14. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS XX XXX XXXXX XX XXX XXXX, XXXXXX XXXXXX OF AMERICA.
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15. WAIVER OF IMMUNITY.
The parties hereto acknowledge that this Agreement is commercial in
nature, and each party hereto expressly and irrevocably waives any claim
or right which it may have to immunity (whether sovereign immunity, act
of state or otherwise) for itself or with respect to any of its assets
in connection with an arbitration, arbitral award or other proceeding to
enforce this Agreement, including, without limitation, immunity from
service of process, immunity of any of its assets from pre- or
post-judgment attachment or execution and immunity from the jurisdiction
of any court or arbitral tribunal.
16. EXPORT CONTROL.
The parties hereto acknowledge that to the extent any products, software
or technical information provided under this Agreement or the Right of
Use Agreement are or may be subject to any applicable export laws and
regulations, the parties hereto agree that they will not use,
distribute, transfer or transmit the products, software or technical
information (even if incorporated into other products) except in
compliance with such export laws and regulations (or licenses or orders
issued pursuant thereto). If requested by either party hereto the other
party agrees to sign all necessary export-related documents as may be
required to comply therewith.
17. REPRESENTATIONS: INDEMNITY.
(a) The Grantor hereby represents and warrants to Purchaser that (i)
Grantor is a corporation duly organized and validly existing
under the laws of Bermuda; (ii) the execution, delivery and
performance of this Agreement by Grantor has been duly
authorized by all necessary corporate action on the part of
Grantor and this Agreement is a valid, binding and enforceable
obligation of Grantor enforceable in accordance with its terms
and (iii) the execution, delivery and performance of this
Agreement by Grantor does not violate, conflict with or
constitute a breach of, the organizational documents or any
order, decree or judgment of any court, tribunal or governmental
authority binding on Grantor.
(b) Purchaser hereby represents and warrants to Grantor that (i)
Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of
organization; (ii) the execution, delivery and performance of
this Agreement by Purchaser has been duly authorized by all
necessary corporate action on the part of Purchaser and this
Agreement is a valid, binding and enforceable obligation of
Purchaser enforceable in accordance with its terms; and (iii)
the execution, delivery and performance of this Agreement by
Purchaser does not violate, conflict with or constitute a breach
of, the organizational documents or any order, decree or
judgment of any court, tribunal or governmental authority
binding on Purchaser.
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14
(c) Each Party hereby represents and warrants to the other party
that it has obtained all approvals, consents, governmental
authorizations, licenses and permits as may be required to enter
into this Agreement, and grant or acquire, as the case may be,
the IRU in the Purchased Capacity.
(d) The foregoing representations and warranties shall survive the
execution and delivery of this Agreement.
(e) Subject to Section 11, the Purchaser agrees to indemnify and
hold harmless the Grantor and the Subsidiary Grantors and their
respective officers, directors, employees, agents and
representatives from and against any loss, damage, expense or
cost arising out of or in connection with: (i) any breach or
violation by the Purchaser of applicable law or governmental
regulation and (ii) any claims of whatever nature by third
parties with respect to the services provided by the Purchaser.
(f) Subject to Section 11 the Grantor agrees to indemnify and hold
harmless the Purchaser and its officers, directors, employees,
agents and representatives from and against any loss, damage,
expense or cost arising out of or in connection with: (i) any
breach or violation by the Grantor or any Subsidiary Grantor of
applicable law or governmental regulation, and (ii) any claims
of whatever nature by third parties with respect to the services
provided by the Grantor or any Subsidiary Grantor.
18. RELATIONSHIP OF THE PARTIES.
This Agreement shall not form a joint venture or partnership or similar
business arrangement between the parties hereto and the Subsidiary
Grantors, and nothing contained herein or in the Right of Use Agreement
shall be deemed to constitute a partnership or joint venture or similar
business arrangement.
19. NO THIRD PARTY BENEFICIARIES.
This Agreement does not provide and is not intended to provide third
parties (including, but not limited to, customers of the Purchaser, any
permitted transferee of the Purchased Capacity or any other permitted
user of the Purchased Capacity) with any remedy, claim, liability,
reimbursement, cause of action, or any other right, except for the
Subsidiary Grantors. Furthermore, the Purchaser acknowledges that,
except as set forth in the Right of Use Agreement, it is not a third
party beneficiary of any agreement entered into by the Grantor or the
Subsidiary Grantors including, but not limited to, the Supply Contract
and the OA&M Agreement,
20. ASSIGNMENT.
(a) This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto, the
Subsidiary Grantors and their respective
14
15
successors and permitted assigns; provided that, except for the
collateral assignment of the Grantor's and/or any Subsidiary
Grantor's rights under this Agreement to one or more of the
Grantor's lenders, and except as provided in paragraphs (b) and
(c) of this Section, neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned,
transferred or otherwise disposed of or delegated by either
party hereto without the prior written consent of the other
party.
(b) The Grantor and the Subsidiary Grantors shall be permitted to
assign, transfer or otherwise dispose of any or all of their
rights hereunder and under the Right of Use Agreement and
delegate any or all of their obligations hereunder and under the
Right of Use Agreement to any present or future affiliated
company of the Grantor or to an entity controlled by, under the
same control as, or controlling, the Grantor. The Grantor shall
give the Purchaser notice of any such assignment, transfer or
other disposition or any such delegation.
(c) The Purchaser shall solely be responsible for complying with all
of the terms binding on the "Purchaser" hereunder and shall not
be permitted to assign, transfer or otherwise dispose of any or
all of its rights hereunder or under the Right of Use Agreement
or delegate any or all of its obligations hereunder or under the
Right of Use Agreement to any person or entity except (i) the
Purchaser may enter into one (1) or more lease or license
agreements to lease or license the rights to use any Purchased
Capacity to a lessee or licensee so long as such lease(s) or
license(s) involve in the aggregate less than one (1) MCU of
Purchased Capacity and do not affect the Purchaser's obligations
hereunder and (ii) the Purchaser may transfer its rights (but
not its obligations) to use any Purchased Capacity to a Carrier
Party, so long as the transfer involves less than one (1) MCU of
Purchased Capacity, subject to paragraph (d) of this Section,
provided that simultaneously with transferring such rights to
such Carrier Party, such Carrier Party executes a document
acknowledging:
(i) that it has acquired from the Purchaser rights to use
Purchased Capacity which were conveyed to the Purchaser
under or in connection with a capacity purchase
agreement with the Grantor (the "CPA");
(ii) that the Purchaser has an ongoing obligation under the
CPA to make certain payments to the Grantor (including,
without limitation, in respect of operation,
administration and maintenance expenses) and otherwise
comply with the terms thereof, and that the failure of
the Purchaser to make any such payments when due or the
occurrence of any other breach by the Purchaser of the
terms of the CPA could result in the suspension of the
Purchaser's right to the Purchased Capacity in
accordance with the terms of the CPA; and
(iii) that such Carrier Party is not a third party beneficiary
of the CPA or the Right of Use Agreement.
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(d) The Purchaser may only transfer to a single Carrier Party,
whether pursuant to one (1) or more transfers, its rights (but
not its obligations) to use in the aggregate one (1) or more
MCU's of Purchased Capacity on terms and conditions which are
mutually agreed between the Grantor and: the Purchaser and in
accordance with Paragraph 6 of Annex B to this Agreement.
Any transfer by the Purchaser of its obligations or its rights to use
any Purchased Capacity which is in violation of this Section shall be
void and of no force and effect.
21. CONDITION TO PURCHASER'S OBLIGATIONS.
The Purchaser's obligation to pay for an IRU with respect to any
Purchased Capacity shall terminate if the RFS Date for such Purchased
Capacity has not occurred by June 30, 1999. In any such event, the
Grantor shall refund all amounts of Purchase Price paid by the Purchaser
with respect to such Purchased Capacity as to which Purchaser's
obligation has terminated within thirty (30) days after the applicable
date.
22. 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 or by facsimile transmission to the address
of the respective party as shown below (or such other address as may be
designated in writing to the other party hereto in accordance with the
terms of this Section):
If to the Purchaser: Above Net Communications, Inc.
00 Xxxx Xxx Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxx of America
Attn: Xxxxx Xxxx
Fax No.: 000-000-0000
If to the Grantor: Atlantic Crossing Ltd.
Wessex House
00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Attn: President
Fax No.: 000-000-0000
Any change to the name, address and facsimile numbers may be made at any
time by giving fifteen (15) days prior written notice in accordance
with this Section. Any such notice, demand or other communication shall
be deemed to have been received, if
16
17
delivered by hand, at the time of delivery or, if posted, at the
expiration of seven (7) days after the envelope containing the same
shall have been deposited in the post maintained for such purpose,
postage prepaid, or, if sent by facsimile, at the date of transmission
if confirmed receipt is followed by postal notice.
23. SEVERABILITY.
If any provision of this Agreement is found by an arbitral, judicial or
regulatory authority having jurisdiction to be void or unenforceable,
such provision shall be deemed to be deleted from this Agreement and the
remaining provisions shall continue in full force and effect.
24. HEADINGS.
The Section headings of this Agreement are for convenience of reference
only and are not intended to restrict, affect or influence the
interpretation or construction of provisions of such Section.
25. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which when
executed and delivered shall be deemed an original. Such counterparts
shall together (as well as separately) constitute one and the same
instrument.
26. ENTIRE AGREEMENT.
This Agreement together with the Schedules, Annexes and Attachments
thereto supersedes all prior oral or written understandings between the
parties hereto and constitutes the entire agreement with respect to the
subject matter herein. This Agreement shall not be modified or amended
except by a writing signed by authorized representatives of the parties
hereto.
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18
27. PUBLICITY AND CONFIDENTIALITY.
(a) The provisions of this Agreement and any non-public information,
written or oral, with respect to this Agreement ("Confidential
Information") will be kept confidential and shall not be
disclosed, in whole or in part, to any person other than
affiliates, officers, directors, employees, agents or
representatives of a party (collectively, "Representatives") who
need to know such Confidential Information for the purpose of
negotiating, executing and implementing this Agreement. Each
party agrees to inform each of its Representatives of the
non-public nature of the Confidential Information and to direct
such persons to treat such Confidential Information in
accordance with the terms of this Section 27. Nothing herein
shall prevent a party from disclosing Confidential Information
(i) upon the order of any court or administrative agency, (ii)
upon the request or demand of, or pursuant to any regulation of,
any regulatory agency or authority, (iii) to the extent
reasonably required in connection with the exercise of any
remedy hereunder, (iv) to a party's legal counsel or independent
auditors, (v) to prospective lenders to the Grantor, and (vi) to
any actual or proposed assignee, transferee or lessee of all or
part of its rights hereunder provided that such actual or
proposed assignee agrees in writing to be bound by the
provisions of this Section 27.
(b) The foregoing shall not restrict either party from publicly
announcing that it has entered into this Agreement with the
parties hereto, but without including any details contained in
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
on the date first written above.
ATLANTIC CROSSING LTD.
By:
-----------------------------------
Name:
Title:
ABOVE NET COMMUNICATIONS, INC.
By: /s/ XXXX XXXX
-----------------------------------
Name: Xxxx Xxxx
Title: CTO
18
19
Schedule I
Description of Purchased Capacity
(a) (b) (c) (d) (e) (f)
Date of Transaction Payment Due Date Appropriate S-Segment Number of Whole MCUs Price per Whole MCU Purchase Price
and Related T-Segments (d)x(e)
Note (1)
[*] [*] [*] [*] [*] [*]
Total Purchase Price [*]
Less Initial Payment [*]
Net Purchase Price Due [*]
Notes:
(1) [*]
(2) [*]
(3) [*]
ABOVENET COMMNICATIONS, INC.
BY: /s/ XXXX XXXX
------------------------
DATE: 12/23/98
-------------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
19
20
Schedule II
AC- I Additional Charges
Function Fees
Access Connection Initial Service [*]
Access Connection Rearrangement per [*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
21
ANNEX A
INDEFEASEBLE RIGHT OF USE AGREEMENT
THIS AGREEMENT (as amended, supplemented or otherwise modified from
time to time, this "Agreement") is made and entered into as of this_____ day of
_______, 199__, between and among Above Net Communications Inc. (the
"Purchaser") and GT Landing Corp., GT U.K. Ltd., Global Telesystems GmbH and GT
Netherlands B.V. (collectively, the "Subsidiary Grantors").
WITNESSETH:
WHEREAS, each Subsidiary Grantor is a wholly-owned subsidiary of
Atlantic Crossing Ltd. (the "Parent") who is the grantor under the Capacity
Purchase Agreement (as amended, supplemented or otherwise modified from time to
time, the "Capacity Purchase Agreement") to which a copy of this Agreement is
attached;
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined in this Agreement shall have the meanings assigned to them in the
Capacity Purchase Agreement;
WHEREAS, upon completion of the construction and installation of the
System, GT Landing Corp. will have an IRU in the whole of Segment T-1, GT U.K.
Ltd. will own Segment T-2, Global Telesystems GmbH will own Segment T-3 (except
with respect to that portion of Segment T-3 which comprises Subsegment T-3B in
which Global Telesystems GmbH shall have rights) and GT Netherlands B.V. will
own Segment T4 (except with respect to that portion of Segment T-4 which
comprises Subsegment T-4B in which GT Netherlands B.V. shall have rights);
WHEREAS, subject to and in accordance with the terms of the Capacity
Purchase Agreement, the Parent is conveying certain S Capacity to the Purchaser
on an indefeasible right of use basis;
WHEREAS, each Subsidiary Grantor desires to grant to the Purchaser, at
no additional charge and for so long as the Purchaser maintains an IRU in any S
Capacity, an indefeasible right of use with respect to its respective T Segment
to the extent required by the Purchaser to use its MU in such S Capacity; and
WHEREAS, the Subsidiary Grantors acknowledge and agree that the
Purchaser has relied upon this Agreement in entering into the Capacity Purchase
Agreement;
NOW, THEREFORE, the Subsidiary Grantors covenant and agree as follows:
1. Upon the effectiveness of the grant to the Purchaser of an indefeasible
right of use with respect to any S Capacity (including in any Residual
Capacity) in accordance with the Capacity Purchase Agreement, each
Subsidiary Grantor grants to the Purchaser, at no
22
additional charge and for so long as the Purchaser maintains an IRU in such
S Capacity, an indefeasible right of use with respect to its respective T
Segment to the extent required by the Purchaser to use its IRU in the S
Capacity.
2. Subject to Sections 10 and 11 of the Capacity Purchase Agreement, each
Subsidiary Grantor shall use commercially reasonable efforts to maintain,
or cause the Operator to maintain, its respective T Segment in accordance
with the provisions, set forth in the Capacity Purchase Agreement.
3. The performance of this Agreement by each of the Subsidiary Grantors is
contingent upon the continuance of the Capacity Purchase Agreement and upon
the obtaining and continuance of such approvals, consents, governmental
authorizations, licenses and permits as may be required or deemed necessary
by such parties and as may be satisfactory to them. The Subsidiary Grantors
shall use all reasonable efforts to obtain and continue such approvals,
consents, governmental authorizations, licenses and permits. No license
under patents is granted by the Subsidiary Grantor or shall be implied or
arise by estoppel in the Purchaser's favor with respect to any apparatus,
system or method used by the Purchaser in connection with the use of the T
Segment(s) granted hereunder.
4. The Subsidiary Grantors and the Parent have entered into the Supply
Contract to obtain plant, equipment and services necessary to allow the T
Segments to be placed into operation on the applicable scheduled RFS Date.
The Subsidiary Grantors do not warrant or guarantee that the RFS Date will
occur for any T Segment and the Subsidiary Grantors will otherwise have no
obligation under this Agreement or otherwise unless and until the
applicable RFS Date occurs. UNLESS SPECIFICALLY SET FORTH IN THIS
AGREEMENT, ANY OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING BUT NOT
LIMITED TO, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE ARE SPECIFICALLY DISCLAIMED.
5. In no event shall any Subsidiary Grantor be liable to the Purchaser for
consequential, incidental, indirect or special damages, including, but not
limited to, loss of revenue, loss of business opportunity, or the costs
associated with the use of restoration facilities.
6. This Agreement shall not form a joint venture or partnership or similar
business arrangement between the parties hereto or between the parties
hereto, the Parent and the Purchaser, and nothing contained herein shall be
deemed to constitute a partnership or joint venture or similar business
arrangement.
7. This Agreement does not provide and is not intended to provide third
parties (including, but not limited to, customers of the Purchaser, any
permitted transferee of the Purchased Capacity or any other permitted user
of Purchased Capacity) with any remedy, claim, liability, reimbursement,
cause of action, or any other right.
23
8. This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the Purchaser and the Subsidiary Grantors and their
respective successors and permitted assigns under the Capacity Purchase
Agreement.
9. This Agreement shall not be modified or amended except by a writing signed
by authorized representatives of the parties hereto.
10. This Agreement shall become effective on the date set forth above and shall
continue in effect for the duration of the Capacity Purchase Agreement, and
shall immediately terminate without any further action upon the termination
of the Capacity Purchase Agreement.
11. The provisions of Sections 10, 11, 12, 14, 23 and 25 of the Capacity
Purchase Agreement are hereby incorporated herein by reference, mutatis
mutandis, and shall be deemed a part of this Agreement as if fully set
forth herein.
24
IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the date first written above.
ATLANTIC CROSSING LTD.
By:
--------------------------------------
Name:
Title:
GT LANDING CORP.
By:
--------------------------------------
Name:
Title:
GT U.K. LTD.
By:
--------------------------------------
Name:
Title:
GLOBAL TELESYSTEMS GmbH
By:
--------------------------------------
Name:
Title:
GT NETHERLANDS B.V.
By:
--------------------------------------
Name:
Title:
ABOVE NET COMMUNICATIONS, INC
By: /s/ XXXX XXXX
-------------------------------------
Name: Xxxx Xxxx
Title: CTO
25
ANNEX B
ATLANTIC CROSSING
SUBMARINE CABLE SYSTEM
----------
DETAILS RELATING TO CAPACITY PURCHASE AGREEMENT
----------
26
ATLANTIC CROSSING
SUBMARINE CABLE SYSTEM
ANNEX B
TABLE OF CONTENTS
PARAGRAPH PAGE
--------- ----
1. DEFINITIONS ................................................................ 2
2. CABLE SYSTEM CONFIGURATION AND SEGMENTS .................................... 4
3. OWNERSHIP AND PROVISION OF SEGMENTS AND ADDITIONAL PROPERTY ................ 6
4. ACCESS/INLAND CONNECTION SERVICES .......................................... 7
5. THE SYSTEM ADVISORY COMMITTEE .............................................. 8
6. TRANSFER OF RIGHTS TO USE PURCHASED CAPACITY ............................... 9
7. INTENTIONALLY OMITTED ...................................................... 9
8. OPERATIONS, ADMINISTRATION AND MAINTENANCE OF SEGMENTS AND ACCESS
CONNECTIONS ................................................................ 9
9. KEEPING AND INSPECTION OR BOOKS ............................................ 11
10. TERMINATION, REALIZATION OF ASSETS ........................................ 11
ATTACHMENTS
Attachment 1 - Configuration of the Atlantic Crossing Submarine Cable System
Attachment 2 - Terms of Reference for Assignments, Routing and Restoration
Attachment 3 - Terms of Reference for Operation and Maintenance
Attachment 4 - RFS Date
27
ATLANTIC CROSSING SUBMARINE CABLE SYSTEM
ANNEX B TO CAPACITY PURCHASE AGREEMENT
1. DEFINITIONS.
Definitions are as described in the specific Paragraphs or in the
Capacity Purchase Agreement to which this Annex B is attached. Except as
otherwise provided, the following definitions shall apply throughout
this Annex B:
Adjusted Pro Rata Share (for apportionment of Residual Capacity): with
respect to each of the Segment S-1 Residual Capacity, Segment S-2
Residual Capacity, Segment S-3a Residual Capacity, Segment S-3b Residual
Capacity, Segment S-3c Residual Capacity and Segment S-4 Residual
Capacity, a fraction:
(i) the numerator of which equals the sum of (A) the number of
[*] on the applicable S Segment in which the Purchaser acquired
an IRU from the Grantor pursuant to this Agreement and which
were deemed contracted for prior to October 10, 1997, multiplied
by 3, (B) the number of [*] on the applicable S Segment in which
the Purchaser acquired an IRU from the Grantor pursuant to this
Agreement and which were contracted for on and after October 10,
1997 but prior to June 1, 1998, multiplied by 2 and (C) the
number of [*] on the applicable S Segment in which the Purchaser
acquired an IRU from the Grantor pursuant to this Agreement and
which were contracted for on and after June 1, 1998 but prior to
the earlier of (x) the RFS Date for the entire System and (y)
November 30, 1998; and
(ii) the denominator of which equals the sum of (A) the number
of [*] on the applicable S Segment that all purchasers acquired
an IRU in from the Grantor and which were deemed contracted for
prior to October 10, 1997, multiplied by 3, (B) the number of
[*] on the applicable S Segment that all purchasers acquired an
IRU and which were contracted for on and after October 10, 1997
but prior to June 1, 1998 multiplied by 2 and (C) the number of
[*] on the applicable S Segment that all purchasers acquired an
IRU in from the Grantor and which were contracted for on and
after June 1, 1998 but prior to the earlier of (x) the RFS Date
for the entire System and (y) November 30, 1998.
The Adjusted Pro Rata Share shall be calculated by the Grantor and shall
be conclusive absent manifest error.
Basic System Module: A Basic System Module of the System shall consist
of a digital line section in each direction with interface in accordance
with ITU Recommendations G.703 and G.707 to G.709 and containing [*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
28
Cable Landing Point: Cable Landing Point shall be the beach joint at
each cable landing location or the mean high water xxxx of ordinary
spring tides if there is no beach joint.
Carrier Party: Any entity authorized or permitted under the laws of its
respective country, to acquire and use facilities for the provision of
international telecommunication services.
Initial Design Capacity: The Initial Design Capacity of each Segment of
the System shall consist of [*] fiber pairs providing a minimum of [*]
Basic System Modules (eight will be used for service and the remaining
eight will be used for restoration) initially supplying [*] or any
increase as determined from time to time by the Grantor in its sole
discretion.
Inland Carrier: An entity authorized or permitted under the laws of its
respective country to provide for inland communications services.
Maintenance Authority: An entity designated by the Grantor which shall
be primarily responsible for the operations and maintenance of the wet
plant as set forth in Paragraph 8(b).
Segment S-1 Residual Capacity, Segment S-2 Residual Capacity, Segment
S-3a Residual Capacity, Segment S-3b Residual Capacity, Segment S-3c
Residual Capacity and Segment S-4 Residual Capacity: With regard to each
of the S Segments, as of the date which is [*] years after the RFS Date
for the entire System, [*] that portion of the service capacity on the
applicable S Segment which is available as of such date to be sold by
the Grantor to prospective purchasers, together with, to the extent
necessary to use such S Capacity, the applicable T Capacity. The amount
of Residual Capacity for each such S Segment shall be determined solely
by the Grantor and shall not, in any event, include any capacity on the
applicable S Segment which the Grantor has determined should be reserved
for restoration purposes.
System Interface: The nominal [*] digital/optical input/output ports on
the digital/optical distribution frame (including the digital/optical
distribution frame itself) where the Basic System Module connects with
other transmission facilities or equipment.
Terminal Parties: The Terminal Parties are GT U.K. Ltd., Global
Telesystems GmbH, GT Landing Corp. and GT Netherlands B.V., each of
which are wholly-owned subsidiaries of the Grantor.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
29
2. CABLE SYSTEM CONFIGURATION AND SEGMENTS
(a) The configuration of the System shall be as shown in Attachment
1.
(b) In accordance with the arrangements contained in this Annex B,
the System shall be regarded as consisting of the following
Segments:
Segment S-1: A submarine cable linking Segments T-2 and T-1.
Segment S-2: A submarine cable linking Segments T-1 and T-3.
Segment S-3a: A submarine cable linking Segments T-4 and T-2.
Segment S-3b: A submarine cable linking Segments T-3 and T-4.
Segment S-3c: A submarine cable linking Segments T-2
and T-3 (which goes through Segment T-4).
Segment S-4: The portion of the System linking Segments
T-1 and T-4
Segment T-1: A cable station in Brookhaven, New York,
United States, together with that portion of
the System which is located between such cable
station and the point which is one-half mile
beyond the United States territorial limit.
Segment T-2: A cable station in Whitesands, United
Kingdom, together with that portion of the
System which is located between such cable
station and the point which is one-half mile
beyond the United Kingdom territorial limit.
Segment T-3: A cable station in Sylt, Germany, together
with that portion of the System which is
located between such cable station and the
point which is one-half mile beyond the Germany
territorial
limit.
Segment T-4: A cable station in Beverwijk, Netherlands,
together with that portion of the System which
is located between such cable station and the
point which is one-half mile beyond the
Netherlands territorial limit.
It is assumed that under the current law of the United Kingdom, the
United States, the Netherlands and Germany, the territorial waters of
such country extend twelve nautical miles seaward from the coast of such
country. If such assumption shall prove to be
30
incorrect, or if a law shall change such assumption and in fact the
territorial waters of any such country extend beyond twelve nautical
miles, the parties hereto shall adjust the T Segment of the applicable
Terminal Party..
(c) Except as provided herein, Segments T-I and T-2 shall include,
as appropriate:
(i) the transmission cable and equipment associated with the
submersible plant between the point which is one-half mile
beyond the territorial waters of the United Kingdom or the
United States, as appropriate, up to the [*] digital/optical
or input/output ports on the digital/optical distribution frame
(including the digital/optical distribution frame itself) where
the Basic System Module connects with other transmission
facilities or equipment;
(ii) the land, civil works and buildings at the specified
locations for the cable landing and for the cable route
including cable rights-of-way and ducts between the applicable
cable station and its respective Cable Landing Point, and common
services and equipment at each of the locations, together with
equipment in each of those cable stations which is solely
associated with the System; and
(iii) the sea earth cable and electrode system and/or the land
earth system, or an appropriate share thereof, associated with
the terminal power feeding equipment.
(d) Except as provided herein, Segment T-3 consists of Subsegment
T-3A and Subsegment T-3B.
Subsegment T-3A shall consist of:
(i) the transmission cable and equipment associated with the
submersible plan between the point which is one-half mile beyond
the territorial waters of Germany up to the nominal [*]
digital/optical or input/output ports on the digital/optical
distribution frame (including the digital/optical distribution
frame itself) where the Basic System Module connects with other
transmission facilities or equipment, together with equipment in
the cable station which is solely associated with the System;
(ii) the sea earth cable an electrode system and/or the land
earth system associated with the terminal power feeding
equipment; and
(iii) all of Global Telesystems GmbH's leasehold interest or
other rights in Subsegment T-3B.
Subsegment T-3B shall consist of all the land, civil works and building
in Sylt, Germany for the cable landing and the cable rights of way and
ducts between the cable station and the Cable Landing Point.
(e) Except as provided herein, Segment T-4 consists of Subsegment
T-4A and Subsegment T-4B.
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Subsegment T-4A shall consist of:
(i) the transmission cable and equipment associated with the
submersible plant between the point which is one-half mile
beyond the territorial waters of the Netherlands up to the
nominal [*] digital/optical or input/output ports on the
digital/optical distribution frame (including the
digital/optical distribution frame itself) where the Basic
System Module connects with other transmission facilities or
equipment, together with equipment in the cable station which is
solely associated with the System;
(ii) the sea earth cable an electrode system and/or the land
earth system associated with the terminal power feeding
equipment; and
(iii) all of GT Netherlands B.V.'s leasehold interest or other
rights in Subsegment T-4B.
Subsegment T-4B shall consist of all the land, civil works and building
in Beverwijk, Netherlands for the cable landing and the cable rights of
way and ducts between the cable station and the Cable Landing Point.
(f) Each S Segment shall also include the transmission cable
equipped with appropriate repeaters and joint housings between
the respective T Segments.
3. OWNERSHIP AND PROVISION OR SEGMENTS AND ADDITIONAL PROPERTY
(a) Segments X-0, X-0, X-0x, X-0x, S-3c and S-4 shall be owned and
provided by the Grantor.
(b) GT Landing Corp., a wholly-owned United States subsidiary of the
Grantor, shall own (or shall have a right of use for) and
provide Segment T-1. Segment T-2 shall be owned and provided by
GT UK Ltd., a wholly-owned United Kingdom subsidiary of the
Grantor. Subsegment T-3A shall be owned and provided by Global
Telesystems GmbH, a wholly-owned German subsidiary of the
Grantor. Subsegment T-4A shall be owned and provided by GT
Netherlands B.V. a wholly owned Netherlands subsidiary of the
Grantor.
(c) Global Telesystems GmbH has procured rights in Subsegment T-3B
of the System from Deutsche Telekom and or its subsidiary
Deutsche Telekom Immobilen und Service GmbH.
(d) GT Netherlands B.V. has procured rights in Subsegment T-4B of
the System from KPN Telecom.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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4. ACCESS /INLAND CONNECTION SERVICES
(a) Access connection services refers to the transmission facilities
and the equipment required for interconnection between the
demarcation equipment point associated with the System and the
demarcation point associated with inland communications services
("Access Connections"). Within the Cable Stations, the Operator
of the System shall provide [*] Access Connections. Each Access
Connection provides full-time digital private line transmission
on a two point basis. Access Connections may be changed or
modified upon written request of the Purchaser and shall be
provided subject to the availability of equipment, facilities
and personnel necessary to establish the Access Connection in
accordance with the schedule of fees set forth at Schedule II to
the Capacity Purchase Agreement.
(b) This Annex and the Capacity Purchase Agreement is a master
agreement under which service orders for Access Connections
("Service Orders") may be placed by the Purchaser. All Service
Orders will be governed by the terms and conditions of the
Capacity Purchase Agreement and this Annex B. Access Connections
shall be ordered by the Purchaser in accordance with the
Interconnection Services Ordering Procedures manual ("ISOP
Manual") which the Grantor shall publish from time to time. The
Purchaser shall submit all Service Orders under this Agreement
to the Grantor (or its designated agent). When the Service Order
is received, the Purchaser shall be notified of such receipt and
the Grantor shall make a reasonable effort to make (or cause to
have made) the Access Connection available on the date requested
by the Purchaser if requested in accordance with this Annex B
and in accordance with the ISOP Manual. Each Service Order must
provide such information as may be reasonably required in order
to design, install and maintain the Access Connection ordered.
(c) Once placed, the Service Order will be processed in accordance
with the ISOP Manual and a due date will be established.
(d) The provisions of Section 7 of the Capacity Purchase Agreement
shall apply to all Access Connections hereunder.
(ii) (e) The Purchaser may obtain inland connection services
("Inland Connections") for the purpose of extending the
Purchaser's Capacity inland, by entering into one of the
following types of agreements, all of which shall be
subject to the provisions of Sections 10 and 11 of the
Capacity Purchase Agreement to which this Annex is
attached through an agreement with entities related to
the Grantor which have acquired rights in additional
inland capacity so that the Purchased Capacity can be
extended to certain points of interface in certain
cities.
(f) Deutsche Telekom is the provider of Inland Connections from the
cable station located in Sylt, Germany.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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5. THE SYSTEM ADVISORY COMMITTEE
(a) For the purpose of directing the progress of the System, an
advisory committee (the "Advisory Committee") shall be formed
consisting of the Grantor, each Terminal Party, certain Carrier
Parties having purchased [*] Purchaser shall have no obligation
to serve on the Advisory Committee. The Grantor shall appoint a
Chairman (or several Co-Chairmen and each such appointee(s)
shall serve as a Chairman until such time as the Grantor shall
appoint a replacement Chairman. The Co-Chairmen may appoint one
secretary as an assistant to the Chairman. The Advisory
Committee shall make recommendations to the Grantor (for the
benefit of the Grantor and the Terminal Parties) in respect of
the construction and installation of the System and the
operation and maintenance thereof, which the Grantor may accept
or reject in its sole discretion.
(b) The Advisory Committee will meet on the call of the Chairman or
Co-Chairmen or whenever requested by one or more of its members.
The Chairman or Co-Chairmen shall give the Advisory Committee at
least thirty (30) days advance written notice of each meeting,
together with a copy of the draft agenda. In case of emergency,
such notice period may be reduced upon the request of the
Grantor. Documents to be discussed at any meeting of the
Advisory Committee shall be made available to the Advisory
Committee members at least fourteen (14) days before the
meeting, but the Advisory Committee may agree to discuss
documents distributed on less than fourteen (14) days notice.
(c) To aid the Advisory Committee in the performance of its duties,
the following Expert Working Groups (hereafter "EWG's") shall be
formed (whose members need not be on the Advisory Committee),
and said EWG's, under the direction of the Advisory Committee,
shall be responsible for making recommendations to the Advisory
Committee for their respective areas of interest listed in
Attachment 2 and Attachment 3 and any other areas of interest
designated by the Advisory Committee:
(i) Assignments, Routing and Restoration (the "A&R EWG");
and
(ii) Operations and Maintenance (the "O&M EWG").
(d) The Chairman or Co-Chairmen of the Advisory Committee and the
Grantor in consultation with the Advisory Committee may
establish such other groups as they shall determine in their
discretion to provide assistance in the Advisory Committee's
performance of its responsibilities hereunder. The Chairman or
Co-Chairmen of the Advisory Committee and the Grantor in
consultation with the Advisory Committee shall appoint the
Chairman or several Co-Chairmen of the A&R and O&M EWGs. Each of
which EWGs shall meet at least once annually and more
frequently, if necessary, until two (2) years following the RFS
Date for the System, and thereafter as may be appropriate.
Meetings of such groups may be called to consider specific
questions at the discretion of its Chairman or Co-Chairmen, or
whenever requested by the Grantor or a majority of the members
of
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
34
the Advisory Committee. On or about two (2) years after the RFS
Date for the System, the Advisory Committee shall determine
whether any of its EWGs should remain in existence or be
disbanded.
(e) The Grantor shall perform or cause to have performed customary
duties and responsibilities pertaining to a Network
Administrator/Customer Care Center for the System.
6. TRANSFER OF RIGHTS TO USE PURCHASED CAPACITY.
(a) The Purchaser shall be permitted to transfer its right to use
the Purchased Capacity only in accordance with Section 20 of the
Capacity Purchase Agreement. In the event Purchaser transfers
(as permitted by said Section 20) its right to use in the
aggregate one (1) of more MCUs of Purchased Capacity to a single
Carrier Party the Purchaser shall immediately notify the Network
Administrator/Customer Care Center of the identity of the
transferee Carrier Party and shall provide all other information
reasonably requested by the Network Administrator/Customer Care
Center.
(b) Subject to clause (a) of this Paragraph 6, the Purchaser may
transfer its rights to use in the aggregate one (1) or more MCUs
of Purchased Capacity to a single Carrier Party at anytime by
giving immediate notice to the Network Administrator/Customer
Care Center.
(c) The Purchaser may not transfer its rights to use in the
aggregate one (1) or more MCUs of Purchased Capacity to a single
Carrier Party without written notification to the Network
Administrator/Customer Care Center.
(d) Confirmation of such transfer of the rights to use in the
aggregate one (1) or more MCUs of Purchased Capacity to a single
Carrier Party shall be provided by the Network
Administrator/Customer Care Center within 7 days after
completion.
7. INTENTIONALLY OMITTED.
8. OPERATIONS, ADMINISTRATION AND MAINTENANCE OF SEGMENTS AND ACCESS
CONNECTIONS
(a) The operation and maintenance of the dry plant for Segments T-1,
T-2, T-3 and T-4 (and to the extent applicable the Access
Connections) shall include the following functions:
(i) monitoring and routine maintenance of terminal
equipment; and
(ii) testing, troubleshooting, fault location and replacement
of faulty terminal equipment using existing spare parts
inventory.
(b) The designated Maintenance Authority shall be responsible for
the operations and maintenance of the wet plant for Segments
X-0, X-0, X-0x, X-0x, S-3c and S-4 and
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Segments T-1, T-2, T-3 and T4, which shall include the following
functions:
(i) determining the need for System repair;
(ii) planning and directing maintenance work;
(iii) providing ship owners and ship operators with the
System's documentation necessary for repairs;
(iv) being responsible for delivery, control and allocation
of System spares between shore storage depots and cable
ships; and
(v) providing trained personnel to perform repair functions
and supplemental cable ship personnel.
(c) Maintenance Costs include but are not limited to the following:
(i) dry maintenance including the land segment to the beach
joint;
(ii) wet maintenance;
(iii) cable protection and at sea repairs;
(iv) common equipment costs associated with the Atlantic
Crossing equipment at the cable stations; and
(v) operating costs associated with operating each cable
station.
(d) If the only IRU in S Capacity acquired by the Purchaser is on
Segment S-3a, Segment S-3b or Segment S-3c or if the Purchaser
has acquired unmatched capacity on Segment S-3a, Segment S-3b,
or Segment S-3c, then Maintenance Costs for such capacity shall
mean, for any calendar year, an amount equal to 110% of the
Purchaser's allocated share of 20% of the actual costs of
operating, maintaining and repairing the System for the calendar
year preceding such period; provided that in no event shall the
Purchaser be required to pay Maintenance Costs in respect of
such capacity pursuant to this (d) for any calendar year in an
amount in excess of [*] acquired in such capacity. The
Purchaser's allocable share will be determined first by dividing
an amount equal to 20% of the aggregate amount of such actual
costs by the number [*] sold in such S Capacity as of such date
to all users of such S Capacity and then multiplying the
quotient by the number of MCUs in which the Purchaser acquired
an IRU. The assumed Maintenance Costs for the first full
calendar year will be assumed to be [*] (and a pro rata portion
thereof for the period from the applicable RFS Date to the first
January 1 quarterly payment date thereafter) for each of
Segments X-0x, X-0x and S-3c. The Maintenance Costs for the Stub
Period [*] shall be a pro rata portion of the Maintenance Costs
[*] for the relevant full calendar year or partial calendar year
as applicable.
(e) Except as provided in clause (d) above, Maintenance Costs shall
mean, for any calendar year, an amount equal to the difference
between (x) 110% of the Purchaser's allocated share of the
actual costs of operating, maintaining and repairing the System
for the calendar year preceding such period and (y) the
Purchaser's allocated share of the Maintenance Costs payable
pursuant to clause
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
36
(d) above for such period, if any, provided that in no event
shall the Purchaser be required to pay Maintenance Costs
pursuant to this clause(e) for any calendar year in an amount in
excess of [*] (increasing by [*] for each calendar year
occurring after the 1998 calendar year, compounded annually)
[*] The Purchaser's allocable share will be determined first by
dividing the actual costs of operating, maintaining and
repairing the System by the number [*] sold on the entire System
as of such date to all users of the System and then multiplying
the quotient by the number of MCUs in which the Purchaser
acquired an IRU. The assumed Maintenance Costs for the first
full calendar year will be assumed to be [*] (and a pro rata
portion thereof for the period from the applicable RFS Date to
the first January 1 quarterly payment date thereafter). The
Maintenance Costs for the Stub Period [*] shall be a pro rata
portion of the Maintenance Costs [*] for the relevant full
calendar year or partial calendar year as applicable.
(f) Within 30 days after the end of each calendar year, Grantor
shall provide the Purchaser with an itemized statement of the
actual Maintenance Costs for the prior calendar year. If it is
determined that the amount paid by the Purchaser was more or
less than the actual Maintenance Costs for such period, the
Purchaser shall receive a credit for such excess to be applied
against, or pay such shortfall on, the next quarterly payment
date or if necessary in the case of any excess, to subsequent
quarterly payment dates.
9. KEEPING AND INSPECTION OF BOOKS
The Grantor shall keep and maintain, or cause to have kept and
maintained, copies of such books, records, and accounts relating to
bills, for a period of five (5) years from the date of billing and shall
afford the Purchaser the right to review such books, records and
accounts during such period.
10. TERMINATION; REALIZATION OF ASSETS
(a) The Purchaser understands and agrees to abide by all rules,
regulations and requirements reasonably set forth by each entity
having rights in any S Segment or T Segment, including, but not
limited to, equipment and floor spacing equipment,
specifications and equipment.
(b) Nothing contained in this Annex B or the Capacity Purchase
Agreement to which this Annex B is attached shall be deemed to
vest in the Purchaser any salvage rights in any Segment.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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ATTACHMENT I
CONFIGURATION OF THE SYSTEM
Segment S-4 is the portion of the system between Segments T-1 and T-4.
Segment S-3c is the portion of the System between Segments T-2 and T-3.
38
2
- Report regularly, as appropriate, to the Advisory
Committee on the A&R EWG activities
o The A&R EWG shall carry out such other responsibilities as the
Advisory Committee may direct.
o All decisions made by the A&R EWG shall be subject in the first
place to consultation among the members of the A&R EWG and the
Grantor who shall make every reasonable effort to reach
agreement. In the event agreement cannot be reached, the issue
shall be decided by the Grantor.
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ATTACHMENT 3
TERMS OF REFERENCE FOR THE OPERATIONS AND
MAINTENANCE EXPERTS WORKING GROUP
The responsibilities of the O&M EWG shall include the following:
o Recommend to the Grantor any project changes pertaining to the
technical, operational and maintenance aspects that O&M EWG
deems appropriate for the construction of the System.
o Recommend to the Grantor the required quantity of spare
equipment for submersible and terminal equipment. Make
recommendations with respect to depot storage and location of
spare equipment in consultation with the Maintenance
Authorities.
o Provide assistance and support as may be requested by the
Grantor.
o Make recommendations with respect to the testing, operation and
maintenance methods to be used for the System as proposed by the
suppliers or Maintenance Authorities, as appropriate.
o Study other matters and make recommendations with respect to
problems affecting maintenance of the System as may be
identified by the Maintenance Authorities.
o Oversee TSSL under the OA&M Agreement.
o Report on a regular basis to, or when requested by, the Advisory
Committee.
o The O&M EWG shall carry out such other responsibilities as the
Advisory Committee may direct.
o All decisions made by this EWG shall be subject in the first
place to consultation among the members thereof and the Grantor
who shall make every reasonable effort to reach agreement. In
the event agreement cannot be reached, the issue shall be
decided by the Grantor.
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ATTACHMENT 4
RFS STANDARD
RFS Standard means (i) for any Segment that (a) such Segment has the
ability to carry commercial traffic between the two landing points of such
Segment meeting performance criteria of ITU-T G.826 and has line monitoring and
protection switching capability and (b) TSSL tested and provided [*]
interconnectivity capability to the Segment terminal equipment according to
ITU-T G.826, and (ii) for the System, (a) that the System has the ability to
carry commercial traffic throughout the System meeting performance criteria of
ITU-T G.826 with self healing ring protection capability and per Segment
protection capability, has line monitoring and per Segment protection switching
capability and has network management capability and (b) TSSL has tested and
provided [*] interconnectivity capability to the System terminal equipment
according to ITU-T G.826.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
